Collateral & Reserves

Collateral Factor

vTokens come with a collateral factor that ranges from 0% to 95%. This factor determines how much additional liquidity an account can access by minting the enToken.

Assets that are larger or more liquid typically have higher collateral factors. Conversely, smaller or less liquid assets tend to have lower collateral factors. When an asset has a collateral factor of 0%, it cannot serve as collateral and cannot be seized during a forced liquidation event. However, it can still be borrowed.

In essence, the Collateral Factor sets the maximum amount you can borrow against a specific asset. For instance, if the collateral factor for wS is 90%, and you deposit 1000$ worth of wS, the maximum amount you can borrow would be $900 worth of tokens.

Reserve Factor

A portion of the interest paid by borrowers is allocated to the protocol, and the extent of this allocation is defined by the reserve factor, which signifies the percentage of interest directed to the reserve treasury.

For instance, if the reserve factor is set at 20%, it means that Reserve treasury obtains 20% of the interest earned on the borrowed assets. This mechanism serves to bolster the protocol's reserves, safeguarding it against the accumulation of potential bad debt.

Token	Collateral Factor	Reserve Factor	Contract
WETH	80%	20%	0x52260aD4cb690c6b22629166f4D181477a9c157C
USDC	80%	20%	0x87C69a8fB7F04b7890F48A1577a83788683A2036
S	78%	20%	0xc96a4cd13C8fCB9886DE0CdF7152B9F930D67E96