Protocol Parameters

Collateral Factor

Each asset on Hover has a Collateral Factor, which dictates how much a user can borrow based on the value of their deposit.

e.g. a 72% Collateral Factor means you can borrow up to 72% of the value of your deposit.

Reserve Factor

The Reserve Factor determines the proportion of interest allocated into an asset's Reserve Pool. The Reserve Pool acts as a safeguard, protecting lenders from borrower default and liquidation issues.

e.g. a 10% Reserve Factor means that 10% of the interest paid by the borrowers of a given asset would be routed to the Reserve Pool.

Borrow Cap

The Borrow Cap is the maximum amount of a given asset that can be borrowed at a time.

e.g. a 2,000,000 Borrow Cap on KAVA means that is the limit for how much KAVA that can be withdrawn at once and in total by all borrowers on Hover.

Close Factor

The Close Factor is the maximum percentage of a borrower’s loan value that can be repaid in one transaction in the event of a liquidation.

e.g. a 50% Close Factor means that if a borrower has an outstanding debt worth $10,000, up to $5,000-worth of their collateral can be liquidated when their health factor drops below 1.

Interest Rate Model

Hover uses the Jump Rate Interest Model, meaning that our interest rates are adjusted based on asset utilization. If there is high asset utilization, it indicates a greater demand and usage of the asset within Hover. If that is the case (at a utilization rate of 80%), there will be a significant jump in interest rates to greater incentivize asset deposits and loan repayments.