FAQ

Frequently Asked Questions (FAQs)

Deposit and Borrowing

1. Where are my deposited funds stored?

   Your funds are allocated in a smart contract. The code of the smart contract is public, open-source, formally verified, and audited by third-party auditors.

2. How much will I earn?

   Token holders receive continuous earnings that evolve with market conditions based on:

   • The interest rate payment on loans: Depositors share the interests paid by borrowers corresponding to the average borrow rate and the utilization rate. The higher the utilization of a reserve, the higher the yield for depositors.

   • Each asset has its market of supply and demand with its own APY (Annual Percentage Yield), which evolves with time.

3. How much can I borrow?

   The maximum amount you can borrow depends on the value you have deposited and the available liquidity. For example, you can't borrow an asset if there is not enough liquidity or if your borrowing limit doesn't allow you to. You can find every collateral available and its specific parameters for borrowing on the 'Market' page.

4. Why would I borrow instead of selling my assets?

   Selling your assets means closing your position on that particular asset. Hence, if you are long on the asset, you would not be entitled to the potential upside value gain. By borrowing, you can obtain liquidity (working capital) without selling your assets. Users are mainly borrowing for unexpected expenses, leveraging their holdings, or for new investment opportunities.

5. What is obligation health?

   Total borrow/Total collateral assets

6. What happens when my obligation health is increased?

   Depending on the value fluctuation of your deposits, the obligation health will increase or decrease. If your obligation health decreases, it will improve your borrow position by making the liquidation threshold more unlikely to be reached. In the case that the value of your borrowed assets against the collateralized assets increases instead, the obligation health is also increasing, causing the risk of liquidation to increase.

7. When do I need to pay back the loan?

   There is no fixed period to pay back the loan. As long as your position is safe, you can borrow for an undefined period. However, as time passes, the accrued interest will grow to make your obligation health increase, which might result in your deposited assets becoming more likely to be liquidated.

Liquidation

1. Which situation will trigger liquidation in my account?

When the borrowing limit reaches 100%, the account will trigger liquidation. You can check the borrowing limit on Enzo's official website.

Once 'borrow_value' => 'borrow_limit' (borrow_limit=supply_value*collateral factor), the account will trigger liquidation, and the loan will be repaid. For example, the collateral factor of USDT is 0.85, if your debts are up to 85U or the value of 85U other assets, you will be liquidated.

2. Is liquidation done automatically?

It is not an automatic liquidation; anyone can participate in the liquidation and get the liquidation fee. Because the liquidation robot can perform real-time monitoring, the liquidation robot is generally used to complete the liquidation.

3. Why is the liquidation not triggered, but the deposit amount shows that it is less?

The deposit amount is related to the asset price, and the decline in the asset price will lead to a decline in the value of the asset.

4. How to Avoid Liquidation？

To avoid the increase of your obligation health leading to liquidation, you can repay the loan or deposit more assets to decrease your obligation health. Out of these two available options, repaying the loan would decrease your obligation to health more.

5. what is the liquidation Penalty？

The liquidation penalty is 8% of liquidated assets.

6. How to participate in the Liquidations Ecosystem？

Yes, liquidations are open to anyone, but there is a lot of competition. Normally, liquidators develop their solutions and bots to be the first ones liquidating loans to get the liquidation bonus.

7. what is the Risk Assessment？

No platform can be considered entirely risk-free. The risks related to the Larix platform are the smart contract risk (risk of a bug within the protocol code) and liquidation risk (risk on the collateral liquidation process). Every possible step has been taken to minimize the risk as much as possible-- the protocol code is public and open-source and has been audited. Additionally, there is an ongoing bug bounty campaign live and running. You can find additional risk and security-related information in the risk framework and security and audits sections.

Other Questions

1. How much are the interest rates on Enzo?

It varies between assets. All the supply and borrowing interest rates are available on our platform for users to see.

2. What is the deposit income？

Deposit income includes 2 parts. One part is the income of the deposit, and the other part is the LARIX token.

3. What is the Net APY?

Net APY=Supply income (supply interest+supply mining income) - Borrow cost (borrow interset-borrow mining income)