Themis V2 Documentation
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M1 Supported Asset

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M1 mainly supports collateral lending of Yield Bearing Token, such as AMM LPToken, Staked Token, or redeemable cross-chain bridge assets. These assets can support transfers, such as EIP-20, EIP-4626, EIP-721, EIP-1155, etc.;
  • LP Token: protocols such as Uniswap V2, Sushiswap, Balancer, Curve;
  • Vaults:such as Arrakis, Oasis, Yearn, YIN, Charm;
  • Gauge:Some platforms need to stake LP in Gauge to distribute rewards and benefits, such as Curve, Balancer, Arrakis;
  • NFTs:The first to be supported are Financial NFTs such as LP credentials Uniswap V3's NFT (EIP-721), Solv Protocol's Invoice (EIP-3525).

Risk Management

There will be the following parameters for the collateral for risk control:

Lendable Asset

There is a list of assets that can be borrowed for each collateral. For example, when using USDC/WETH as collateral, WETH and USDC can be borrowed. Therefore, we have a list of assets that can be borrowed for each collateral. Usually, the evaluation features are:
  • The assets exist in the LP will normally be on the list;
  • The borrowing list can be expanded for more liquid collaterals;

MaxLTV

Like M0, There is also MaxLTV for M1 assets, showing the maximum borrow amount of the collateralized asset. This setting means the ratio of the maximum borrow amount to the current deposited value of the asset.
For M1 assets, we will evaluate the LTV configuration according to the following dimensions
  • The consensus of the market: usually long-term holding expectations are higher, and assets with smaller short-term redemption expectations will have higher LTV;
  • Liquidity: Assets that are generally easier to liquidate will have higher LTVs;
  • Competitors: Assets that are commonly used in lending protocols are generally with higher LTVs;
  • The correlation between loan assets and collateral assets: for example, stablecoin LPs will have a higher LTV for the assets within the borrow transactions.
MaxLTV may be adjusted urgently when the market is volatile.

Liquidation Threshold

The LiquidationThreshold of M1 is one of the basic conditions for determining whether an asset can be liquidated. In M1, Loan Risk=Debt Value/Collateral Value*LiquidationThreshold. When Loan Risk>=100%, the collateral will be liquidated by the liquidator.

Liquidation Penalty

There is no additional Liquidation Bonus in M1, if the collateral is liquidated, the arbitrage margin for the liquidator is 100% - Liquidation Threshold.
The liquidator can only execute 100% liquidation, that is, return all debts to get the collateral
For example: the value of a collateral asset is $1, and the LiquidationThreshold is 80%. Then:
  • Assuming that the value of the collateral remains $1, when the debt reaches $0.8, LoanRisk reaches 100%, and the liquidation is triggered. The liquidator repays the debt of $0.8 and receives the collateral, which worths $1.
  • Assuming that the debt is worth $0.6, and the collateral value is reduced to $0.75. LoanRisk reaches 100%, and the liquidation is triggered. The liquidator repays the debt of $0.6 and receives the collateral, which worths $0.75.
Liquidated assets in M1 usually have a long redemption path, even involving cross-chain, so there will also be a large discount of liquidation penalty as a reward for liquidators.