Glossary

Some terms used throughout the documentation may be unfamiliar to developers. Below we list some common terms that will help with your understanding.

Term	Description
APY	Annual Percentage Yield, which is the yield/interest after a year, which includes compounding interest. Note that this is different from Annual Percentage Rate (APR), which does not take into account compounding effects.
Liquidity Index	The Deposit Interest cumulated by the reserve during the time interval since the last updated timestamp
Borrow Index	The Debt Interest cumulated by the reserve during the time interval since the last updated timestamp
LTV	Loan To Value, or Collateral Ration. The maximum borrowing power of a specific collateral. If a collateral has a Loan to Value of 75%, for every 1 ETH worth of collateral the user will be able to borrow 0.75 ETH worth of principal currency. The Loan To Value is specified per collateral and expressed in percentage points.
Liquidation Threshold	The threshold of a borrow position that will be considered under-collateralized and subject to liquidation. If a collateral has a liquidation threshold of 80%, it means that the loan will be liquidated when the debt value is worth 80% of the collateral value. The liquidation threshold is specified per collateral and expressed in percentage points.
Liquidation Bonus	The floor price discount for buying collateral paid by liquidators to incentive the purchase of specific collateral that has a health factor below 1. The Liquidation Bonus is specified per collateral and expressed in percentage points.
Health factor	Represents the ratio between total collateral multiplied by the liquidation threshold, and the borrowed principal. When the Health Factor goes below 1, the loan is under-collateralized and can be liquidated. Also see liquidate().
Ray units	For internal calculations and to reduce the impact of rounding errors, the protocol uses the concept of Ray Math. A Ray is a unit with 27 decimals of precision. All the rates (liquidity/borrow/utilization rates) as well as the cumulative indexes and the aTokens exchange rates are expressed in Ray.Please refer to the following article for further details about this concept.
Reserve	The address of the underlying crypto currency token or ERC20.
NFT	The address of the underlying non-fungible token or ERC721.
Redeem Duration	Before redeem duration ends, borrower of collateral that has a health factor below 1, can redeem own collateral by paying all of debt and penalty fine. After duration expires, borrower will lost own collateral forever.
Auction Duration	Before auction duration ends, liquidator can take part in auctioning for collateral that has a health factor below 1. After duration expires, liquidator of highest bid price can receiving the collateral.
Redeem Fine	The penalty fine paid by borrower and received by liquidators to incentive the purchase of specific collateral that has a health factor below 1. The Redeem Bonus is specified per collateral and expressed in percentage points.