key concepts
Orchid is a lending protocol where users supply assets to earn yield and borrow assets using collateral.
There are two ways Orchid can expose markets depending on deployment:
Pooled markets: assets share liquidity inside a unified pool
Isolated markets: a specific collateral and borrow pair is segmented to contain risk
If you see “isolated”, it means risk is scoped to that market, not the whole system.
Tokens you’ll see
When you supply an asset, you receive an oToken (Orchid supply receipt token). oTokens represent your share of the supply side and their redeemable value rises as interest accrues.
When you borrow, you receive a variable debt token that represents your outstanding debt and grows with interest.
Collateral, LTV and Health Factor
Your position is governed by two safety concepts:
LTV (Loan to Value): borrowed value relative to collateral value
Health Factor: a single number that summarizes liquidation risk
A higher health factor = safer position. If it falls below the liquidation threshold, your collateral can be liquidated.
A typical health factor form looks like:
Health Factor =
(sum of collateral value × liquidation threshold) / total borrow valueOrchid enforces “safe actions” in the UI so you do not accidentally withdraw or borrow into liquidation.
Interest rates
Orchid uses utilization-based rates.
Utilization = how much of supplied liquidity is currently borrowed.
Low utilization: borrow rates stay low, supply yield stays low
High utilization: borrow rates rise, supply yield rises, liquidity becomes expensive
Rates are updated automatically by the protocol’s interest rate strategy.
oToken share price
When you supply, you mint oTokens at the current share price. Over time, interest is capitalized into the pool, so each oToken becomes redeemable for more underlying asset.
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