Glossary

Borrow/Debt: To borrow other listed assets in an over-collateralized manner.

Borrow Cap: Specifies the maximum amount of an asset that can be borrowed. A borrow cap is an optional parameter, and the value will depend on the on-chain liquidity of the asset and total volume of borrowed assets in the market.

Collateral: Assets pledged as security for repayment of a loan, to be forfeited in the event of a liquidation.

Collateralized Debt Position (CDP): A debt position created by locking (i.e. depositing) assets as collateral in the smart contract.

Decentralized Money Market: A permissionless financial avenue that functions without a custodian, where lending and borrowing occur to facilitate more fluid capital flow.

Efficient Mode: Allows assets which are correlated in price (e.g., DAI, USDC, and USDT) to be listed in the same eMode category to maximize capital efficiency.

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 under-collateralized and can be liquidated.

Isolation Mode: Limits an asset to only borrow isolated stablecoins and only use a single isolated asset as collateral at a time.

Lend/Loan: To lend one or multiple assets at a time, to earn an interest on each of them.

Loan to Value (LTV): The maximum borrowing power of a specific collateral. If a collateral has a LTV of 75%, for every 1 ETH worth of collateral, the user will be able to borrow 0.75 ETH worth of principal currency.

Liquidation: When the collateralization ratio of the loan falls below the minimum ratio (i.e. health factor falls below 1), the liquidation threshold will be triggered, forcing the closing out of all or a portion of the initial margin debt position.

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.

Liquidation Threshold: The limiting point where a borrow position will be considered under-collateralized and subject to liquidation. For a collateral with a liquidation threshold of 80%, 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.

Liquidator: If the collateralization ratio of the loan falls below the minimum ratio, anyone can take on the role of a liquidator and call a function on the contract to liquidate the loan and receive a percentage of the collateral as a reward (i.e. liquidation bonus).

Mint: To manufacture or create new Carbon stablecoin in an over-collateralized manner.

Nitron: The decentralized non-custodial money market powered by Carbon, where users can participate as depositors (lenders), borrowers or liquidators permissionlessly.

Over-collateralized: To borrow assets or mint a stablecoin, the value of the assets users deposit as collateral should be more than what they are borrowing. If the collateralization ratio falls below a minimum ratio, liquidators may step in to liquidate the collateral of the borrowers who fail to pay back their debts.

Siloed Mode: Restricts the borrower to single borrows only (i.e. a user borrowing a siloed asset cannot borrow any other asset).

Supply Cap: Specifies the maximum amount of an asset supplied. A supply cap is an optional parameter, and its value will depend on the on-chain liquidity of the asset and the total volume of collateral assets in the market.