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Cross-Pool Evaluation ​

Health, liquidation, and high-utilization rules rely on two inputs: pool state (available liquidity, borrowed amounts) and the configured SEP-40 oracle (current asset prices). Cross-pool logic evaluates user obligations rather than individual pools, so collateral posted in one pool can support borrowing in another according to configured rules. This enables capital-efficient, multi-asset positions while enforcing conservative behavior under stress.

How cross-pool evaluation works ​

When a user deposits into pool A and borrows from pool B, the protocol doesn't evaluate each pool in isolation. Instead, it aggregates the user's entire obligation — all collateral positions and all borrow positions — and computes a single health factor and borrowing capacity across the full set.

The key inputs per pool are:

  • Open LTV (open_ltv_bps): determines how much each unit of collateral contributes to borrowing capacity
  • Close LTV (close_ltv_bps): determines when the obligation becomes eligible for liquidation
  • Liability factor (liability_factor_bps): a risk weight applied to debt (1×–2×) that inflates the effective debt value for riskier assets

Borrowing capacity across pools ​

When a user wants to borrow from pool B using collateral in pool A, the protocol computes:

BC = (Σ max(Vc_i − Vmin, 0) × oLTV_i) − (Σ Vb_j × LF_j)

Each collateral asset contributes according to its own open LTV, and each borrowed asset is weighted by its own liability factor. The result is a single number that caps all new borrows and collateral withdrawals. See Health Factor for the full formula.

Liquidation across pools ​

Liquidation eligibility is also computed cross-pool. The liquidation health factor (LHF) aggregates every collateral position weighted by its close LTV against every borrow position weighted by its liability factor:

LHF = (Σ Vc_i × cLTV_i) / (Σ Vb_j × LF_j)

When LHF drops below 1, a liquidator can repay debt in one pool and seize collateral from another, as long as both pools belong to the same market. The protocol applies the collateral pool's liquidation incentive and close factor limits regardless of which pool the debt is in.

Graceful degradation ​

These safeguards are designed to degrade gracefully under stress: users are warned early via health factor thresholds, liquidations execute in small slices to limit price impact, withdrawal throttles prevent rapid liquidity drains when utilization is high, and oracle circuit breakers can slow down entry when prices are unstable — all while keeping exits available.