# Parameters

Elara Protocol utilizes several key parameters to manage risk, ensure solvency, and optimize the lending and borrowing experience. Understanding these parameters is crucial for users interacting with the protocol.

## **Collateral Factor** 

The collateral factor defines the maximum borrowing capacity against a particular asset. For example, if USDC has a collateral factor of 80%, and its price is $1, users can borrow up to $0.80 for every $1 of USDC supplied as collateral.

## **Reserve Factor**

The reserve factor is the percentage of borrower's interest that accrues to Elara's reserve. For instance, a reserve factor of 20% means that 20% of the interest paid on an asset goes to Elara's reserve, enhancing protocol sustainability.

## **Close Factor** 

The close factor determines the maximum amount that can be liquidated in a single transaction. A 50% close factor means that up to 50% of a liquidatable account's borrow can be repaid in one liquidation transaction.

## **Liquidation Incentive** 

The liquidation incentive is the bonus given to liquidators for performing liquidations, ensuring protocol solvency. An 8% liquidation incentive means liquidators receive an extra 8% of the borrower's collateral value during liquidation.

## **Parameter Details by Asset**

| Pool | Asset | Collateral factor | Close factor | Liquidation incentive | Reserve factor |
| ---- | ----- | ----------------- | ------------ | --------------------- | -------------- |
| Main | USDT  | 65%               | 50%          | 20%                   | 20%            |
| Main | WETH  | 65%               | 50%          | 20%                   | 20%            |

{% hint style="info" %}
Note: These parameters are subject to change based on market conditions and governance decisions. Users should always refer to the most up-to-date information on the Elara platform.
{% endhint %}


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