Glossary
Complete glossary of Lotus protocol terms covering market, tranche, LLTV, IRM, hooks, pre-liquidation, cascading supply, productive debt, and more.
Market
A set of risk-ordered tranches sharing a loan token, IRM, and liquidation module
Market ID
Deterministic identifier for a market, computed as keccak256(abi.encode(loanToken, irm, liquidationModule, collateralTokens, oracles, lltvs)). In prose: "market ID." In code: marketId
Tranche
One risk configuration within a market, defined by collateral token, oracle, and LLTV
LLTV
Liquidation Loan-to-Value: the threshold at which a position becomes eligible for liquidation
LTV
Loan-to-Value: the current ratio of debt to collateral value
Junior Tranche
Higher-risk tranche with higher LLTV and higher expected yields
Senior Tranche
Lower-risk tranche with lower LLTV and lower expected yields
Oracle
External price feed contract that returns the price of one collateral token in loan token units, scaled by 1e36. Each tranche specifies its own oracle
Free Supply
Amount of loan token that can be borrowed or withdrawn from a tranche, accounting for liquidity cascade constraints
Junior Supply
Total lender liquidity from a tranche through all more junior tranches
Junior Net Supply
Supply minus borrow from a tranche through all more junior tranches. Represents net available liquidity at a given tranche level
Junior Borrow
Total borrower debt from a tranche through all more junior tranches
Available Supply
The total supply accessible at a tranche, including cascaded liquidity from more junior tranches. Equivalent to junior supply at that tranche index
Utilization
The fraction of available supply currently borrowed in a tranche, computed as 1 - freeSupply / jrSupply
IRM
Interest Rate Model: logic that computes borrow rates from tranche utilization
Rate At Target
The borrow rate at the target utilization level in the adaptive IRM. Serves as the anchor point around which the piecewise linear rate curve pivots and is adjusted dynamically within configured bounds. In code: rateAtTarget
Liquidation Module
Pluggable contract that prices and executes liquidations for a market. Implements initializeMarket, calculateLiquidation, and executeLiquidation
Pre-Liquidation
Mechanism that allows partial liquidation of a borrower's position before it reaches the full LLTV threshold. Operates in the zone between a configurable pre-liquidation LTV and the LLTV, with close factors and incentives that increase linearly as LTV approaches LLTV
Cascading Supply
Mechanism allowing unused liquidity from junior tranches to support senior borrowers
Productive Debt
Borrower debt that generates interest flowing to suppliers. In LotusUSD markets, the borrow rate is composed of a base rate plus a credit spread
Base Rate
The yield earned by the underlying backing asset (e.g., LotusUSD). In productive debt markets, the base rate provides a floor return to lenders regardless of utilization
Credit Spread
The additional interest rate above the base rate that compensates lenders for the credit risk of a particular tranche. Lenders earn the credit spread only on the borrowed portion of their supply
Bad Debt
Loss from liquidations allocated to suppliers based on utilization weights
Flash Loan
Uncollateralized loan that must be repaid in full within the same transaction. Lotus flash loans charge no fee — the borrower repays exactly the amount borrowed
Callback
Optional function call from Lotus to a user contract during certain operations, enabling atomic strategies. Supported callbacks: ILotusSupplyCallback, ILotusRepayCallback, ILotusFlashLoanCallback, ILotusSupplyCollateralCallback, and ILotusLiquidateCallback
Hook
Post-operation extension point that executes custom logic after core protocol operations (supply, borrow, withdraw, collateral management). Hooks can approve or reject operations by returning their selector or reverting. Configured per-market by the admin via setMarketHook
Lending Vault
Vault V2 instance that allocates into Lotus tranches via the LotusV2Adapter
Adapter
An ERC-4626 adapter (LotusV2Adapter) that connects a lending vault to the Lotus protocol, converting vault operations into Lotus supply and withdraw calls
Adapter ID
Unique identifier for a LotusV2Adapter instance, computed as keccak256(abi.encode("lotus", adapterAddress)). In code: adapterId
Skim Recipient
Address authorized to withdraw stray tokens sent to a LotusV2Adapter contract via the skim() function. In prose: "skim recipient." In code: skimRecipient
LotusUSD
Stablecoin issued by the Lotus protocol, used as loan asset in markets
Risk Axis
The dimension along which tranches are ordered (e.g., LLTV, collateral quality, oracle sensitivity)
Risk Curve
The mapping of tranches to risk and return profiles within a market. Junior tranches sit at the high-risk, high-return end; senior tranches sit at the low-risk, low-return end
Loan Token
The ERC-20 asset borrowed by borrowers and supplied by lenders in a market
Collateral Token
The ERC-20 asset posted as collateral by borrowers in a specific tranche
Supply Shares
Receipt tokens representing a lender's share of tranche supply assets
Borrow Shares
Accounting shares representing a borrower's share of tranche borrow assets
Fee
Protocol fee fraction applied to supplier interest, distributed via share inflation to the fee recipient
Pending Interest
Interest that has accrued on a tranche's borrow side but has not yet been distributed to the supply side. Distributed during supply-side accrual sweeps. In code: pendingInterest
Fee Recipient
Address that receives protocol fees minted as supply shares
Max Borrow
The maximum amount a position can borrow given collateral, oracle price, and LLTV
Health
Position solvency status; healthy if max borrow ≥ actual borrow under the tranche's oracle and LLTV
Last updated