M0 mainly supports collateral lending for blue-chip assets, typically EIP-20 assets.
M0 also supports EIP-2612, which means that after Permit, no additional Approval i needed for holders.
Whether the assets can support the parameters and functions related to E-Mode.
Themis 2.0 will have the following parameters for the asset for risk control:
Assets that are not available as collateral may exist in one or more of several situations：
- The asset has the potential to be frozen in a pool, e.g. it can be blacklisted for centralized control transfers;
- The asset can be issued centrally, an action that is not trusted by the community;
- The asset does not have sufficient liquidity or trading venues;
- Highly volatile asset prices;
- Excessive concentration of asset holders；
- The community assesses the asset as untrusted.
The ratio of the maximum value an asset can be borrowed after collateralizing, this setting means the ratio of the total maximum value the user can borrow after supplying the asset to the current supplied value.
We have three dimensions to evaluate the LTV allocation of an asset：
- Based on market consensus: assets with typically higher long-term holding expectations and lower short-term redemption expectations will have a higher LTV.
- Based on liquidity: assets that are generally more likely to be liquidated will have higher LTV.
- Based on competitors: assets that are commonly used in lending agreements are typically assessed higher LTV.
MaxLTV may initiate emergency motions to make adjustments in times of severe market volatility.。
LiquidationThreshold is one of the factors that determine when an asset meets the liquidation condition. The substantial collateral value of the asset after completion of the charge is the asset value * LiquidationThreshold, which is the portion of the basis that the liquidator can obtain after paying the debt in lieu of the borrower.
Upon completion of the liquidation, the liquidator helps the debtor pay off the debt by obtaining collateral and the additional Bonus. This ensures that the liquidator will receive additional income in the liquidation, thus encouraging third parties to proceed with the liquidation.
The liquidator will receive the collateral and Bonus, while the remaining collateral will be retained for the borrower
E.g.: Assuming the MaxLTV of ETH is 80%, the LiquidationThreshold is 90%, and the LiquidationBonus is 5%, then for a $100 ETH deposit, the maximum dollar value that can be borrowed is $80, and the substantive collateral value of ETH is $90 when LoanRisk=Debt Value/Substantial Collateral Value = 100%, at which point it can be liquidated;；
- Suppose liquidation occurs because the debt grows to $90, then the liquidator needs to help repay the Token corresponding to $90 and get $95 of ETH collateral, the remaining $5 will be reserved for the borrower.
- Suppose the debt is still $80 and the material collateral value of ETH = DepositLiquidationThreshold falls to $80, then at this time the collateral still has $88.8, then the liquidator will get $80+$88.85%=$84.4 of ETH after repaying the corresponding Token corresponding to $80, and the remaining $4.36 of ETH will be reserved to the borrower.
The liquidator may also liquidate only 50% of the debtor's collateral