Risks & Parameters
We want to remind our users that there are many risks when using Defi products, our team will try our best to mitigate these risks. However, humans err. So do make sure that you are aware of the risks associated.
The risks involves using our protocols includes:
- Port Finance Contract Risk: we try our best to write safe code and we do internal and external code review as well as audits by reputable auditing firm. However, we do want to remind our users that issue could arise
- Oracle Risk: we choose Pyth Oracle as our providers. They are backed by some of the most reputable trading firms. However, there could still be risk of an inaccurate or wrong price data is feed into our lending products
- Underlying Asset Risk: we support some synthetic assets or asset issued by other protocols. We are very selective when listing new assets and we make sure the contracts are audited and also the team is trustworthy. We still want to remind our users that in the unfortunate event, that these synthetic assets greatly depreciate in value, protocol users might suffer loss.
We choose the below risk parameters of the asset with the above risks in mind:
LTV is the ratio between the maximum allowed borrow value and the collateral value.
Concretely, say that a user deposit 100 USD worth of SOL, according to the currently LTV of 85% for Solana the users are able to borrow up to 85 USD worth of assets
Liquidation threshold is the ratio between borrow amount and the collateral value at which the users are subject to liquidation.
Concretely, say that a user deposit 100 USD worth of SOL and borrow 85 USD worth of assets, according to the currently liquidation threshold of 90%, the user is subject to liquidation if the value of the assets that they borrow has increased 90 USD.
Liquidation bonus is the extra amount of collateral that the liquidator will get for taking the risk of liquidating the users.
As an example, if the user has put in 100 USD worth of SOL and borrow 85 USD. If the value of the borrowed asset has reached 90 USD. The liquidator can comes in and pay 50 USD worth of SOL and it will be able to get back 50 * (1 + 2%) = 51 USD worth of SOL.