Glossary

Some terms used throughout the documentation may be unfamiliar to developers. Below we list some common terms that will help with your understanding.

Term	Description
APY	Some terms used throughout the documentation may be unfamiliar to developers. Below we list some common terms that will help with your understanding. glossary
Loan To Value (LTV)	The maximum borrowing power of a specific collateral. If a collateral has a Loan to Value of 75%, for every 1 ETH worth of collateral the user will be able to borrow 0.75 ETH worth of principal currency. The Loan To Value is specified per collateral and expressed in percentage points.
Liquidation Threshold	The threshold of a borrow position that will be considered undercollateralized and subject to liquidation. If a collateral has a liquidation threshold of 80%, it means that the loan will be liquidated when the debt value is worth 80% of the collateral value. The liquidation threshold is specified per collateral and expressed in percentage points.
Liquidation Bonus	The bonus received by liquidators to incentivise the purchase of specific collateral that has a health factor below 1. The Liquidation Bonus is specified per collateral and expressed in percentage points.
Health Factor	Represents the ratio between total collateral multiplied by the liquidation threshold, and the borrowed principal. When the Health Factor goes below 1, the loan is undercollateralized and can be liquidated. Also see execute_liquidation.
Ray Units	For internal calculations and to reduce the impact of rounding errors, the protocol uses the concept of Ray Math. A Ray is a unit with 27 decimals of precision. All the rates (liquidity/borrow/utilisation rates) as well as the cumulative indexes and the aTokens exchange rates are expressed in Ray. Please refer to the following article for further details about this concept.
Market	The address of the underlying asset.
Lending Pool	The smart contract with which users interact to perform funding operations
Funding Operations	Operations such as borrow , repay, withdraw, deposit
Liquidity Rate	The interest rate currently being earned by the reserve
Liquidity Index	The Interest cumulated by the reserve during the time interval since the last updated timestamp
Automatic Leverage Vaults	By borrowing and lending, you are longing or shorting an asset. You can technically use the asset you borrowed to repeat the process a few more times, making it equivalent to a "spot leverage". We apply the same idea to Automatic Leverage Vaults and make this process straightforward for users.