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  • Moonwell Risk Methodology
    • Risk Vectors
      • Volatility Risk
      • Liquidity Risk
      • Oracle Risk
    • Governance Parameters
      • Interest Rate Model
      • Liquidation Incentive
      • Collateral Factor
      • Close Factor
      • Borrow Cap
    • Methodology
    • Tooling
  • Proposal Diff Reports
    • Sonne SIP-08 Diff Report
    • Moonwell MIP-B08 Proposal Diff Report
    • Moonwell MIP-B09 Proposal Diff Report
    • Moonwell MIP-M09 Proposal Diff Report
    • Moonwell MIP-B10 Proposal Diff Report
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  • Utility
  • Methodology

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  1. Moonwell Risk Methodology
  2. Governance Parameters

Borrow Cap

Breakdown of Borrow Cap parameter utility and methodology

Utility

The borrow cap limits the amount of short side exposure the protocol is willing to take for a given asset. Maintaining a borrow cap is especially useful for assets that are more prone to price manipulation (high concentration / low liquidity level).

Methodology

We’ll determine the borrow cap setting using the max trade size for a determined threshold for buy-side slippage.

For example, a threshold of 5% buy-side slippage could be used for every asset.

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Last updated 2 years ago

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