# Lending Glossary

| 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 Interest cumulated by the reserve during the time interval since the last updated timestamp                                                                                                                                                                                                                                                              |
| Loan To Value         | 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 undercollateralized 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 bonus received by liquidators to incentivise 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 undercollateralized and can be liquidated.                                                                                                                                               |
| Stable rate           | A loan with a stable rate behaves like a fixed rate loan in the short term, but the rates can be rebalanced following sudden market changes in the medium/long term.                                                                                                                                                                                         |
| Reserve               | The address of the underlying asset.                                                                                                                                                                                                                                                                                                                         |