Definitions
Ethos Short for Ethos Reserve. Alternatively, the characteristic spirit of a culture, era, or community as manifested in its beliefs and aspirations.
Position A collateralized debt position, bound to a single Ethereum address. Also referred to as a “CDP” in similar protocols.
ERN The stablecoin that is issued from a user’s collateralized debt position upon opening. 1 ERN can always be exchanged for $1 of collateral or deposited in the Stability pool to earn yield.
Bonded OATH Bonded OATH (bOATH) is both OATH and ETH, backed by a Balancer-powered 80/20 liquidity pool. bOATH benefits from trading fees generated by Ethos’ incentive buyback and distribution strategies, and earns Ethos platform fees when deposited in the staking pool.
Collateral Any asset used to open a position on Ethos Reserve. Each collateral has its own isolated pool and associated TCR, CCR, and MCR.
Collateral Pool All the collateral for a given type deposited in Ethos Reserve. Each collateral pool has their own TCR, CCR, and MCR, and is isolated from each other pool. This means that the ETH pool wouldn’t need to worry about changes in the BTC pool’s TCR and vice versa.
Collateral Ratio The ratio of the USD-denominated value of some collateral to the ERN debt that collateral backs. There are multiple important types of collateral ratios, described below.
Personal Collateral Ratio The collateral ratio of an individual wallet’s position.
Total Collateral Ratio (TCR) The collateral ratio of an entire collateral pool. Each collateral type has its own total collateral ratio.
Critical Collateral Ratio (CCR) The TCR below which a given collateral pool will enter Recovery Mode.
Minimum Collateral Ratio (MCR) The minimum required amount of collateral to debt ratio required to maintain an active position in Ethos Reserve.
Stability Pool Pooled ERN which exists to liquidate under-collateralized positions in exchange for discounted collateral and OATH yield.
Staking Pool Pooled bOATH that earns all fees from ERN issuance and redemption.
Borrower A wallet or smart contract that locks collateral in a position and issues ERN tokens to their own address. They “borrow” ERN tokens against their ETH or BTC collateral.
Depositor A wallet or smart contract that has deposited ERN tokens in the Stability Pool in order to earn returns from liquidations and receive OATH token issuance.
Redemption The act of swapping ERN tokens with the system in return for an equivalent value of collateral. Any wallet with an ERN token balance may redeem, whether or not they are a borrower. When ERN is redeemed, the collateral is always withdrawn from the lowest collateralized positions, in ascending order of their collateral ratio. A redeemer can not selectively target positions with which to swap ERN for ETH.
Repayment When a borrower sends ERN tokens to their own position, reducing their debt and increasing their collateral ratio.
Liquidation The act of force-closing an under-collateralized position and redistributing its collateral and debt. When the Stability Pool is sufficiently large, the liquidated debt is offset with the Stability Pool, and the collateral distributed to depositors. If the liquidated debt can not be offset with the Pool, the system redistributes the liquidated collateral and debt directly to the active positions with healthy collateral ratios. Liquidation functionality is permissionless and publically available – anyone may liquidate an undercollateralized position one at a time or batched in ascending order of collateral ratio.
Liquidator Usually a role filled by bots, liquidators call liquidation functions on the Ethos Reserve smart contracts in exchange for users’ gas deposits.
Recovery Mode Recovery Mode activates when a pool’s TCR falls below the CCR. During Recovery Mode, positions with a collateral ratio below that pool’s CCR are subject to liquidation in ascending order from the lowest collateralized position until the system’s TCR is above the CCR. During Recovery Mode, positions are closed as normal using their associated MCR and any leftover collateral will be made claimable on the Ethos Reserve website.
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