Reserve

A reserve represents a specific token pool within Nexus Market. Each reserve is guided by a collection of risk and liquidity parameters, which may differ even for the same token across various pools. This flexibility allows Nexus Market to respond effectively to shifting network and market conditions.

Core Reserve Parameters

• Loan-to-Value (LTV)

  • LTV determines the maximum amount a user can borrow against their collateral, expressed as a percentage of the collateral’s value.

  • Example: If the LTV for a specific token is set to 75%, it means you can borrow up to 75% of your collateral’s worth.

• Liquidation Threshold

  • This threshold defines the point at which a borrowing position is considered under-collateralized and may be liquidated.

  • Mechanics: Should a user’s collateral value drop below this limit, a portion of the collateral could be sold off to repay part of the debt and stabilize the reserve.

• Borrowing Enabled

  • Indicates whether liquidity in a particular reserve is available for borrowing.

  • Operational Impact: If borrowing is disabled for a token, no new loans can be drawn, although existing loans will typically remain unaffected.

• Interest Rate Model

  • Interest rates adjust dynamically based on the reserve’s utilisation (i.e., how much of the supplied liquidity is currently borrowed).

  • Mechanism: As borrowing demand increases, interest rates rise to reflect the decreasing availability of assets. This ensures sufficient liquidity remains on hand for withdrawals and potential liquidations.

• zTokens (Interest-bearing Tokens)

  • When users deposit assets, they receive zTokens representing their stake in the lending pool.

  • These tokens automatically accrue interest in real time, and the user’s account balance in zTokens grows to reflect any earnings.