Tentroller

Risk management for the LEND protocol is accomplished through the Tentroller, it helps determine the amount of collateral a user will be required to maintain and whether or not a user can be liquidated and by what amount. The Tentroller will approve or deny all transactions each time a user interacts with a tToken on the LEND protocol.

Tentroller will coordinate user balance to price to weigh the risk in order to make its decisions. Users will list via the protocol as to which asset wwill be included in their risk profile scoring, this is done by calling the enter market and exit market functions. (NO UI specific call, this is done via smart contract)

Collateral Factor

The collateral factor for tTokens can range anywhere from 0-90%, which represents a proportionate increase in liquidity that an account can receive by minting the tToken.

In general, large or liquid assets will have a higher collateral factor, while the smaller and less liquid assets will have lower collateral factors. If an asset has a 0% collateral factor, we cannot use it as a collateral for the LEND protocol, though we can still borrow it.

The collateral factor can be changed (increased or decreased) at any time given the market conditions at that time.

Liquidation Incentive

This is the additional collateral given to a liquidator as an incentive for liquidating underwater accounts on the platform. If the liquidation incentive is 1.2, the liquidators receive an additional 20% of the borrower’s collateral for every unit closed.

LEND Distribution Speeds

LEND Speed

The LEND protocol has a unique LENDspeed that is unique to each individual market, and is an unsigned whole number that specifies the amount of LEND that is to be distributed, per block, to suppliers and borrowers in each market. This number can be changed for individual market at any given time by calling on the _setLENDSpeed method.

Below is the formula in which the rate that LEND is distributed to each market is calculated.

LEND Distributed Per Block (All Markets)

The Tentroller contract’s lendRate is an unsigned number that specifies the rate at which the LEND protocol will distribute LEND to the market suppliers or borrowers. The value is calculated based on the amount of LEND per block that is allocated for the markets. Not all markets will have LEND distributed to its participants.

The lendRate specifies the amount of LEND going to suppliers and borrowers, thus when doubled, this will indicate the total number of LEND going to all suppliers and borrowers collectively.

LEND Distributed Per Block (Single Market)

The Tentroller’s contract has a mapping named lendSpeeds, which it mapes the tToken addresses to a specific number in each market’s LEND distribution per block. The number specifies the rate at which the LEND protocol will distribute LEND to market suppliers or borrowers. The value is then the amount of LEND per block allocated for the markets. Not all markets will have LEND distributed to its participants.

This speed indicates the amount of LEND that goes to the suppliers and borrowers, thus when doubled, this will indicate how much LEND will go to market suppliers and borrowers collectively.