Liquidity Risk
Liquidity risk of the protocol is measured based on Obligation Health, the state of liquidation risk. When Obligation Health exceeds 100%, excess borrowed assets will be automatically liquidated by the bot. Borrow APY’s are set above supply APY’s to maintain a healthy liquidity pool, which assures the utilization limit is not breached. A health factor is attributed to user’s borrowed value to ensure it does not exceed the collateral factor.
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