Algofi
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Definitions
Definitions of technical terms used to describe the Algofi protocol.
Base Interest Rate: The minimum interest rate that borrowers pay if borrow utilization were 0%.
Borrow: The amount in dollars that a user has borrowed against the protocol
Borrow Utilization: The percentage of supply being borrowed by users. e.g. if 100mm USDC has been lent and 15mm is borrowed, the borrow utilization is 15%.
Collateral Factor: The amount of additional max borrow provided to a user by supplying a given collateral asset, in %. E.g. $100 of collateral with a 50% collateral factor would permit a maximum of $50 of borrowing.
Inner Transactions: Transactions executed by smart contracts. e.g. Inner PaymentTxn where the smart contract address sends algos. See https://developer.algorand.org/docs/get-details/dapps/smart-contracts/apps/#inner-transactions for more information.
Liquidation: The process by-which an under-collateralized user's debt is repaid.
Liquidation Incentive: Fraction of collateral seized by the liquidator that is earned as a reward for liquidating bad debt.
Max Borrow: The amount in dollars that a user may borrow against the protocol before being at risk of liquidation.
Optimal Utilization: The borrow utilization rate after which the borrow rate increases more steeply.
Reserve Factor: The fraction of borrowed interest paid that goes to the Algofi DAO treasury.
Slope Under Utilized: The rate at which the borrow interest rate increases when borrow utilization is below the optimal utilization.
Slope Over Utilized: The rate at which the borrow interest rate increases when borrow utilization exceeds the optimal utilization. In general, the slope overutilized >>> slope underutilized.
Storage Account: During opt-in, an account called the Storage Account is created for the user where their lending / borrowing data are saved. The user funds the account so it is able to opt-in to the Algofi contracts and it is rekeyed to the Manager contract so it is unable to be edited. By rekeying, the protocol prevents users from running ClearStateTxns against their storage account which would wipe the data. The user and storage accounts are mapped 1-to-1.
Supply: The assets lent on the protocol.
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