Markets, Parameters & Risk
Isolated Lending Markets
Each asset in Chainflip Lending has its own isolated lending market.
This means:
- Supplying USDC exposes the user only to USDC borrower behaviour
- Borrowing against BTC collateral does not affect the ETH market
- Losses or liquidations in one market cannot spill over into another
This isolation ensures predictable risk for suppliers and straightforward market growth as new assets are added.
Per-Asset Parameters
Every lending market defines a set of core parameters that determine:
- minimum collateralisation requirements
- soft and hard liquidation thresholds
- interest rate behaviour
These parameters are calibrated per asset, according to liquidity depth, volatility, and suitability as collateral.
Current parameters used in closed beta testing are intentionally aggressive and will be made more conservative at public launch.
LTV Thresholds
The following thresholds govern loan creation and liquidation behaviour:
- Minimum Creation LTV: 80% Maximum LTV allowed when opening a new loan
- Auto Top-Up Trigger: 85% Auto-collateralisation begins adding collateral here
- Soft Liquidation Threshold: 90% Triggers soft liquidation
- Soft Liquidation Abort: 88% LTV required to stop soft liquidation
- Hard Liquidation Threshold: 95% Triggers hard liquidation
- Hard Liquidation Abort: 93% Drops from hard → soft liquidation once reached
These thresholds may change as the system matures and liquidity grows.
Minimum Operational Amounts
To keep the system efficient and avoid excessive “micro-transactions”, a few minimum amounts apply:
- Minimum Supply Amount: $100
- Minimum Loan Creation Amount: $100
- Minimum Loan Update Amount: $10
- Minimum Collateral Add/Remove: $10
These minimums ensure consistent UX and reduce unnecessary State Chain load.
Liquidation Execution Parameters
Liquidation orders follow defined size and slippage limits to ensure predictable behaviour for LPs and borrowers.
Soft Liquidation
- Swap Chunk size: $10,000
- Slippage limit: 0.5% below oracle price
- Submitted: once per block
Hard Liquidation
- Swap Chunk size: $50,000
- Slippage limit: 5% below oracle price
- Submitted: once per block
LPs compete on price, so execution usually remains very close to market rates, even during hard liquidation.
Supported Assets
At launch, Chainflip Lending supports:
- BTC
- USDC, USDT, ETH on Ethereum
- SOL on Solana
Additional assets may be added progressively as liquidity improves and risk parameters are evaluated.
Risk Considerations
Chainflip Lending is designed to minimise systemic risk through:
- Isolated markets
- Oracle-driven collateral valuations
- Early, gradual liquidations (rather than all or nothing)
- Integrated DEX execution, reducing dependency on external liquidators
- Auto-top-up, preventing accidental liquidations
However, lenders may be exposed to:
- socialised losses in rare scenarios where collateral is insufficient in an attempt to fully liquidate a loan
- periods of high utilisation, causing higher borrow rates
- oracle outages, temporarily pausing liquidations and new loan creation
Overall, risk is tightly scoped to each asset pool and side, making the system predictable and transparent.