Borrow and Collateral factors by Alpha Tiers
Currently, Alpha Homora V2 only supports Alpha Tier 1 (Alpha Woof Woof)

Why do base tokens and LP tokens not have collateral factors and borrow factors respectively?

As seen in the image below, base tokens do not have collateral factors and LP tokens do not have borrow factors.
On Alpha Homora V2, the actual collateral is the LP token itself which is why there is no collateral factor for base tokens. Similarly, users cannot directly borrow LP tokens which is why there is no borrow factor.
Borrow and collateral factors for Alpha Tier 1 (Alpha Woof Woof)

What is collateral factor?

The collateral factor determines how many credits are gained per dollar of the LP token collaterized. According to the image above, the collateral factor for Uniswap's ETH-DAI LP token is at 0.79. This means for every dollar of Uniswap's ETH-DAI LP token collaterized, 0.79 credits are gained by the user.
For instance, if a user deposits $100 dollar worth of Uniswap's ETH-DAI LP token, 79 credits will be gained.
Note: Every borrowed token that gets supplied to the pool will be part of the LP, so it naturally counts towards collateral credits.

What is borrow factor?

The borrow factor determines the amount of credits consumed, per dollar of the base token borrowed. According to the image above, the borrow factor for WETH is 1.26. This means for every dollar of ETH that is borrowed, 1.26 credits will be consumed.
For instance, if a user borrows $100 of ETH, 126(100*1.26) credits will be consumed.

Alpha Tiers

Once the Alpha Tiers are integrated onto Alpha Homora V2, Alpha Stakers of higher Alpha tiers will be able to unlock higher leverage. This feature is unlocked by increasing the collateral factor and decreasing the borrow factor on higher tiers.
Last modified 4mo ago