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.

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 value

Orchid 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.