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Collateral Factors

How much of an LP position counts toward borrowing capacity after risk discounts.

Overview

Collateral factors define the fraction of an LP position's recoverable value that can support debt. The Borrow Spoke first reconstructs the position, prices its underlying assets, and applies recoverable-value discounts. It then applies the configured collateral factor to calculate the position's borrowing capacity.

How It Works

Valuation begins with a pool-admission check: only positions from approved pools are accepted as collateral. The position is reconstructed, underlying assets are priced, and the result is discounted to recoverable collateral value. Collateral factors and market settings are applied. The spoke reports aggregate borrowing capacity to the Hub for enforcement.

Borrowable Value

Avana values each LP position separately before aggregating borrowing capacity within a Borrow Spoke. Similar-looking positions can contribute different amounts because their pools, recoverable values, and collateral factors differ.

A supported LP position contributes borrowing capacity only after the spoke has admitted it, valued it conservatively, and applied the market's collateral factor.

Notes

  • • Each supported pool's configuration specifies its collateral factors.
  • • Different LP families can have different factors, liquidation thresholds, and bonuses.
  • • Read this together with Health Factor and Liquidation Framework when building monitoring tools.