Risk Parameters

Introduction

To guarantee solvency at all times, Kalmar uses excess collateral and a liquidation system for closing positions in danger of becoming undercollateralized. Unlike many DeFi protocols of previous generations, Kalmar uses an aggregated liquidation service with one central smart contract entry point rather than resorting to liquidators having to track individual endangered positions.

The risk framework uses two groups of settings: system-wide (Global Parameters) and individual (Pool-Specific Parameters).

Global Parameters

There are five parameters that apply to every position in the Leveraged Yield Farming system. They set the rules for borrowing from the bank and repayments or liquidations for debts to the bank. The parameters are shown in the table below:

Name

Value

Function

Description

Minimum Debt Size

0.5 BNB

minDebtSize()

The minimum borrowing amount (if borrowed any) for opening a position.

Borrowing Interest Rate

0%-200%

getInterestRate()

Borrower’s interest rate to be paid, accrued per second.

Reserve pool rate

20%

getReservePoolBps()

Portion of borrower’s interest to be stored in bank’s reserve.

Liquidation bonus

5%

getKillBps()

Portion of position value the liquidator gets as an incentive to liquidate positions at risk.

Reinvest Reward Bounty

3%

Inside Goblin contract

Incentive reward for bounty hunters calling

reinvest function.

Pool-specific Parameters

Liquidity borrowed from the Bank can be used in a number of yield farming pools, each with its own liquidity and asset type or asset pair. The risk framework has to account for different volatility levels between assets and pools to guarantee timely liquidation for the loan to stay solvent. This is why debt ratio and liquidation ratio have to be individual, per the tables below:

Name

Value

Function

Description

Max Debt Ratio

Depends on the pool (see below)

workFactor()

Maximum debt ratio when opening/adjusting a position must satisfy.

Liquidation Debt Ratio

Depends on the pool (see below)

killFactor()

Debt ratio threshold. If exceeded, anyone can liquidate the position.

Pools on PancakeSwap:

Farm

Info

SXP/BNB

Max Debt Ratio: 70%

Liquidation Debt Ratio: 80%

XVS/BNB

Max Debt Ratio: 70%

Liquidation Debt Ratio: 80%

ADA/BNB

Max Debt Ratio: 70%

Liquidation Debt Ratio: 80%

ATOM/BNB

Max Debt Ratio: 70%

Liquidation Debt Ratio: 80%

CAKE/BNB

Max Debt Ratio: 70%

Liquidation Debt Ratio: 80%

BUSD/BNB

Max Debt Ratio: 70%

Liquidation Debt Ratio: 80%

Subjectable to change.