Risk Parameters

Below is a table of risk parameters for all assets supported on dForce:

Ethereum Mainnet
BSC
Ethereum Mainnet

General Pool

Asset

LTV

Supply Cap

Borrow Cap

Borrow Factor

Reserve Factor

WBTC

80%

3,000

3,000

100%

20%

ETH

80%

40,000

40,000

100%

10%

USDT

0%

50,000,000

50,000,000

100%

10%

USDC

80%

50,000,000

50,000,000

100%

10%

DAI

80%

50,000,000

50,000,000

100%

10%

HBTC

80%

300

300

100%

20%

DF

60%

200,000,000

200,000,000

100%

10%

GOLDx

80%

50,000

50,000

100%

10%

BUSD

80%

20,000,000

20,000,000

100%

10%

UNI

70%

100,000

100,000

100%

15%

USX

70%

30,000,000

30,000,000

100%

10%

EUX

70%

20,000,000

20,000,000

100%

10%

xBTC

70%

400

400

100%

10%

xETH

70%

5,000

5,000

100%

10%

Asset

Mintage Cap

Mintage Fee %

USX

30,000,000

3%

EUX

20,000,000

3%

xBTC

400

0%

xETH

5,000

0%

  • Close Factor for assets sitting in the General Pool is 50%.

  • Liquidation Incentive for assets sitting in the General Pool

    is 7%.

Synthetic Pool

Asset

LTV

Supply Cap

Borrow Cap

Borrow Factor

Reserve Factor

USX

80%

100,000,000

0

100%

10%

EUX

80%

40,000,000

0

100%

10%

Asset

Mintage Cap

Mintage Fee %

xTSLA

no limit

0%

xAAPL

no limit

0%

xAMZN

no limit

0%

xCOIN

no limit

0%

  • Close Factor for assets sitting in the Synthetic Pool

    is 50%.

  • Liquidation Incentive for assets sitting in the Synthetic Pool

    is 20%.

BSC

General Pool

Asset

LTV

Supply Cap

Borrow Cap

Borrow Factor

Reserve Factor

BTCB

80%

3,000

3,000

100%

15%

ETH

80%

40,000

40,000

100%

15%

BNB

80%

300,000

300,000

100%

15%

USDT

80%

50,000,000

50,000,000

100%

10%

USDC

80%

50,000,000

50,000,000

100%

10%

DAI

80%

50,000,000

50,000,000

100%

10%

ATOM

70%

1,500,000

1,500,000

100%

15%

FIL

70%

350,000

350,000

100%

15%

DOT

70%

400,000

400,000

100%

15%

ADA

70%

8,000,000

8,000,000

100%

15%

DF

60%

200,000,000

200,000,000

100%

15%

GOLDx

80%

50,000

50,000

100%

15%

BUSD

80%

50,000,000

50,000,000

100%

10%

UNI

70%

300,000

300,000

100%

15%

USX

70%

30,000,000

30,000,000

100%

10%

EUX

70%

20,000,000

20,000,000

100%

10%

xBTC

70%

400

400

100%

10%

xETH

70%

5,000

5,000

100%

10%

Asset

Mintage Cap

Mintage Fee Rate

USX

30,000,000

3%

EUX

20,000,000

3%

xBTC

400

0%

xETH

5,000

0%

  • Close Factor for assets sitting in the General Pool is 50%.

  • Liquidation Incentive for assets sitting in the General Pool

    is 7%.

Synthetic Pool

Asset

LTV

Supply Cap

Borrow Cap

Borrow Factor

Reserve Factor

USX

80%

100,000,000

0

100%

10%

EUX

80%

40,000,000

0

100%

10%

Asset

Mintage Cap

Mintage Fee Rate

xTSLA

no limit

0%

xAAPL

no limit

0%

xAMZN

no limit

0%

xCOIN

no limit

0%

  • Close Factor for assets sitting in the Synthetic Pool

    is 50%.

  • Liquidation Incentive for assets sitting in the Synthetic Pool

    is 20%.

There are seven main indicators of risks that apply to the analysis of supported assets on dForce, namely:

Term

Description

Collateral Support

It refers to whether an asset can be used as collateral in a lending protocol. This is the first line of defense against infinite mint risk, or risk of market price volatility. For example, let’s assume asset ABC is enabled as a collateral. If there is infinite mint of ABC, or in the event of ABC price collapsing, we will see a flood of ABC depositing into the lending protocol and borrowing out other assets. On the contrary, if a collateral is disabled to be used as collateral in the protocol, it will substantially limit its usability and liquidity. We have introduced a supply cap, which helps limit the collateral risk exposure while maintaining a certain level of flexibility.

Supply Cap

We are one of the two protocols who utilize this risk parameter. In simple terms, the Supply Cap limits the overall exposure of a specific asset. This is particularly important if the said asset is enabled as a collateral within the protocol. For example, say we enable ABC as collateral within our lending protocol, if we set a supply cap of 10m ABC, at a collateral ratio of 75%, this will significantly limit the infinite mint risk of ABC; i.e., even if someone prints 1bn ABC, they can only supply no more than 10m into the lending protocol.

Borrow Cap

Borrow cap is used to mitigate against risk of concentration risk and liquidity risk of the lending protocol. An example of this can be illustrated with Compound. Compound protocol initially did not have a Borrow Cap when in the initial periods of the yield farming craze. In one instance, when arbitrageurs used recursive borrowing to borrow significant amounts of BAT, the borrowing went out of control. If there is significant price swing for BAT, it could put the protocol at risk of being insolvent

Loan-to-Value (or collateral ratio)

This is the most important parameter in a lending protocol. It is basically the leverage ratio of a specific asset, i.e., how much you can borrow against the collateral. The more liquid, stable, and mature an asset is, the higher the loan-to-value ratio

Liquidation Penalty

It is the discount factor to be applied in the event of liquidation of a loan position. During liquidation, a liquidator is able to buy the defaulted borrower’s collateral at discount to market price by repaying the defaulted loan on borrower’s behalf. The discount is the liquidation penalty. The more illiquid, less matured, and more volatile an asset is, there’s typically a higher liquidation penalty to incentivize liquidators to liquidate the defaulted loans in the event of default.

Borrow Factor

dForce is the only lending protocol that introduce this risk parameter. This is to further expand LTV ratio, to consider the liquidity and market risks of the borrowed assets. For example, a borrower who supplies ETH to borrow USDC, is less risky than a borrower who supplies ETH to borrow WBTC (due to price volatility of both ETH/WBTC and illiquidity of WBTC v.s USDC). In other lending protocols, both transactions are subject to the same LTV ratio by design. dForce will take the borrowed asset risk factor into account, which could result in a lower LTV for the same collateral with different borrowed asset. Please note that in the initial stages, we will be setting the Borrow Factor to 100% to simplify the risk module.

Reserve Factor

It is the amount of interest spread that can charged into the reserve pool. This is similar to interest rate spread charge to be reserved by future use.

Close Factor

The maximum amount you can liquidate in a single transaction for a default loan.

Liquidation Incentive

Collaterals from a default loan will be auctioned with a discount as a bonus to incentivize the liquidator.