Key Concepts
Markets
Lending markets on Orchid Credit are built around a simple principle: users deposit assets, others use them as collateral to borrow, and the protocol coordinates these flows in a secure and transparent manner.
Supplied assets form the foundation of protocol liquidity. Assets provided by users are made available for borrowing under predefined risk, collateral, and liquidity rules. In return, liquidity providers earn variable yield directly linked to the actual utilization of their funds.
Borrowing always requires collateral. When a user borrows, the value of their collateral is continuously evaluated to ensure the debt remains properly covered. Borrowing conditions (interest rates, maximum capacity, and risk thresholds) adjust dynamically based on supply, demand, and available liquidity.
Supplied assets may also be used as collateral. Users can supply assets, use them to secure a loan, and adjust their position over time by adding collateral or partially repaying debt. This enables flexible and efficient capital usage while maintaining strict risk controls.
Supported Asset Types
Orchid Credit supports assets that can be used as collateral and/or borrowed assets. Each asset is listed with specific parameters, including collateral ratios, liquidation thresholds, and risk factors.
Not all assets are necessarily usable both as collateral and as borrowable assets. This separation helps maintain consistent and market-appropriate risk management.
Health Factor
The health factor is the primary metric used to assess the safety of a position. It represents the ratio between adjusted collateral value and outstanding debt.
A higher health factor indicates a well-collateralized position. When the health factor falls below a defined threshold, the position becomes eligible for liquidation.
All risk metrics are continuously updated and visible to users.
Interest Rates
Interest rates on Orchid Credit evolve dynamically based on supply and demand within each pool. As utilization increases, borrowing rates adjust to reflect liquidity scarcity.
This mechanism promotes natural market balance and incentivizes liquidity provision and timely debt repayment.
Liquidity
Pool liquidity represents the amount of assets available for borrowing. Greater depth allows for larger operations with limited rate impact.
Orchid Credit clearly displays available liquidity and utilization levels for each pool to support informed decision-making.
LST Market
Orchid Credit is designed to progressively integrate with the Liquid Staking Token (LST) market. These assets introduce new opportunities for productive collateral and enable partnerships with staking and infrastructure protocols.
LST integrations are approached cautiously, with risk parameters adapted to their structure and liquidity profiles.
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