> For the complete documentation index, see [llms.txt](https://docs.meridianfinance.net/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.meridianfinance.net/resources/glossary/lending-glossary.md).

# 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.                                                                                                                                                                                                                                                                                                                         |


---

# Agent Instructions
This documentation is published with GitBook. GitBook is the documentation platform designed so that both humans and AI agents can read, navigate, and reason over technical content effectively. Learn more at gitbook.com.

## Querying This Documentation
If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question.

Perform an HTTP GET request on the current page URL with the `ask` query parameter, and the optional `goal` query parameter:

```
GET https://docs.meridianfinance.net/resources/glossary/lending-glossary.md?ask=<question>&goal=<endgoal>
```

`ask` is the immediate question: it should be specific, self-contained, and written in natural language.
`goal` is optional and describes the broader end goal you are ultimately trying to accomplish on behalf of the user. GitBook uses it to tailor the answer towards what is most useful for that goal.

The response will contain a direct answer to the question and relevant excerpts and sources from the documentation.

Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.