Edge Protocol
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# Parameters & Glossary

### Risk Ratio

Risk Ratio determines the healthiness of position, which can be calculated from
$∑ (borrowed asset /borrowed factor)/ ∑ (collateeasset * collat factor)$

### Utilization rate

The utilization rate determines the percentage of total liquidity supplied of an asset that is being borrowed.

### Collateral factor

The factor determines the borrowing power you will get from supplying an asset. For example, if you provide $100 worth of collateral, and the collateral factor of that asset is 75%, then your borrowing power will be at most$75 worth of other assets.

### Borrowing factor

The factor determines how much of the asset you can borrow, given the borrowing power. So, for example, if you have $100 worth of borrowing power, and the asset you want to borrow has a borrowing factor of 75%, you can only borrow$75 worth of that asset.

### Borrowing power

It determines the maximum amount of assets you can borrow from your collateral. It, however, doesn’t take borrowing factors into account.
Post an asset you have supplied as collateral to increase your borrowing power.

### Borrow limit

The borrowing limit determines the maximum amount of an asset you can borrow, given the borrowing power and the borrowing factor of that asset.

### Liquidity incentive

The additional collateral given to liquidators as an incentive to perform liquidation of unhealthy accounts. For example, if the liquidation incentive is 5%, a liquidator receives an extra 5% of the borrower’s collateral for every unit they close.