Glossary
Vault
Vault is a smart contract for Lenders to interact with MethLab. It stores assets, intents and everything related to a Lender on MethLab. Anyone who wants to be a Lender can create a Vault.
Intent
MethLab Intents are the terms upon which Lenders are willing to lend their assets to Borrowers. Lenders write the intents into their particular vaults.
Intent Expiry
Intent Expiry is the duration for which the intent will remain valid waiting to be matched. Lenders can select from a list of different time durations to suit their strategies and risk profiles.
Collateral Reserve Price
Amount of supply asset(in native terms) the Lender supplies plus the interest receivable per unit of collateral token. The Borrower must repay the loan according to the reserve price.
Leverage
It refers to the use of looping (to borrow more funds) to amplify the returns of an investment. A 2x leverage means that every 1$ worth in position will give return that is equal to holding $2 worth in position.
Collateral
Collateral is used to manage the risk of Borrower not repaying the loan. If Borrowers do not repay the loan, Lenders can claim the collateral.
Liquidation-free
MethLab is liquidation-free. If the Borrower does not repay, the collateral is transferred to the Lender. This makes MethLab completely liquidation-free in contrast to pool-based lending protocols.
Black–Scholes model
This is a pricing model used to determine the fair price or theoretical value for a call or a put option based on six variables such as volatility, type of option, underlying stock price, time, strike price, and risk-free rate usually for European options.
Fixed-term
It refers to fixed duration. This is in contrast to pool-based lending protocols where the position may be perpetually opened at the cost of variable or semi-stable interest rates.
Fixed-rate
All positions on MethLab are fixed-rate i.e the interest rate is fixed. Borrowers pay a fixed amount as interest as calculated at position initiation.
Loan-Expiry
The timestamp(date) before which the Borrower must repay the loan in order to reclaim the collateral. If the Borrower is unable to do so, the Lender can claim Borrower's collateral.
Loan
It is the agreement between the Lender and the Borrower that consist of the terms upon which both the participants agree to lend and borrow respectively.
LTV
Loan to value (LTV) determines the maximum worth of supply assets that can be borrowed with a specific collateral worth. It is expressed as a percentage for eg @ 80% LTV i.e means 80% worth of collateral can be borrowed.
MethLab does not internally track LTV(due to oracle-less architecture) but is used on certain panels to abstract Reserve Price logic.
ILTV
Implied Loan-to-value is the weighted average of Loan-to-Value. As a Borrower can get matched with multiple Lenders, I-LTV is the final ratio of borrow asset worth to collateral asset worth.
MethLab does not internally track ILTV(due to oracle-less architecture) but is used on certain panels to abstract Reserve Price logic.
Feedback Loops
Feedback loops are processes where the output of a system influences its own input, either enhancing (positive feedback) or stabilizing (negative feedback) future outputs.
Reserve Price Lending mechanism and Buckets incorporate market changes(lenders updating Intents, liquidity shifting from one Bucket to another and so forth) which are reflected in the Intents. Feedback loops move the protocol towards efficiency.
Buckets
Buckets are an abstraction with a set Interest Rate and term. Refer Bucketing.
For eg. mETH/mUSD-30D-15% is an example of a Bucket with mETH as collateral, mUSD as supply asset, 30 Days as Loan Term, and 15% Interest Rate on an annual basis.
Permission-less
Permission-less is a blockchain-specific term that means that users do not require permission to use a blockchain protocol from any third party or gatekeepers.
The protocol does not have any form of blocking/approval/waitlist mechnaism allowing users to freely interact with all the functions of the protocol.