How Alpha Homora V2 mitigates risks for users?
Firstly, Alpha Tokenomics, which includes staking, will serve as the backstop and an additional insurance pool for the Alpha ecosystem.
Secondly, Alpha Homora v2 uses the concept of collateral credit and borrowing credit to determine how much leverage a user can get given the asset(s) supplied as collateral and the asset(s) borrowed. With this mechanism, Alpha Homora v2 can set parameters according to the volatility of each asset and set different buffer parameters for different assets to ensure the security of the protocol.
Thirdly, when Debt Ratio = 100% (position is at liquidation risk), the position is not yet underwater. Alpha Homora V2 has another buffer layer to allow for more price volatility before the position becomes underwater if not yet liquidated.
Note: Collateral credit and borrowing credit in Alpha Homora V2 are not the same concept as loan-to-value (LTV) used in other lending protocols.
To learn more about collateral credit and borrowing credit, see here.
Last modified 7mo ago
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