Glossary

Overview of key terms in the documentation

Term	Definition
Aave V3	The open-source lending protocol Tydro is built on. Provides the core market, interest rate, and liquidation logic.
APY	Annual Percentage Yield. The yield earned over a year including compounding. Differs from APR, which does not account for compounding.
aTokens	Interest-bearing tokens a lender receives when supplying assets to Tydro. aTokens represent the lender's share of the liquidity pool and accrue interest in real time.
Borrow	To take a loan of an asset against posted collateral, repaid with interest.
Borrow cap	A limit on the maximum amount of a specific asset that can be borrowed from the protocol. Helps manage exposure and reduce systemic risk.
Cluster	A planned market type that groups related assets so they can share collateral and margin within defined limits. See Clusters.
Collateral	An asset a borrower posts to back a borrowing position. The collateral value must exceed the borrowed amount to keep the position solvent. In the launch market, collateral is kBTC.
Cooldown period	A mandatory waiting period before staked tokens can be unstaked from a staking or safety module.
Credit delegation	A feature that lets one user delegate borrowing power to another, so the delegate can borrow against the delegator's collateral through Tydro's smart contracts. [ FLAG: confirm enabled at launch; Aave V3 feature that may not be live in the launch market. ]
Debt ceiling	The maximum debt that can be issued against an isolated asset, used to limit exposure to a single collateral type.
E-Mode	Efficiency Mode. Lets borrowers access higher borrowing power when using correlated assets, such as stablecoins.
Flash loan	An uncollateralized loan that must be borrowed and repaid within a single transaction block.
GHO	Aave’s native decentralized stablecoin, pegged to the US dollar.
Health factor	A ratio summarizing how close a borrower's position is to liquidation, comparing collateral value against borrowed value. Above 1 is safe. At or below 1, the position can be liquidated.
Ink	The Ethereum Layer 2 network Tydro runs on and transactions settle on. Built on the OP Stack and deployed by Kraken.
Isolated market	A market with one collateral asset and one loan asset, with risk contained to that market.
Isolation mode	An Aave V3 mode that restricts a collateral asset to isolated use with a debt ceiling, capping debt against a single collateral type.
kBTC	A token that represents bitcoin, used as collateral in the launch market.
Kraken	A cryptocurrency exchange and custody provider. Developed Ink and provides the custody integration in the Tydro stack.
Liquidation	The process triggered when a borrower's health factor falls to 1 or below. A liquidator repays part of the debt in exchange for collateral plus a bonus, restoring the position to a safer level and keeping the market solvent.
Liquidation bonus	The discount a liquidator receives on collateral when liquidating a position, expressed as a percentage. Set per market.
Liquidation threshold (LT)	The collateral-to-debt ratio at which a position becomes eligible for liquidation. Defined per asset.
Liquidity index	Tracks the cumulative interest earned by a reserve over time, used to calculate interest accrual accurately.
Loan-to-value (LTV)	The maximum a borrower can borrow against a collateral asset, as a share of its value. For example, a 75% LTV means collateral worth 1 unit allows borrowing up to 0.75 units.
Market	A venue pairing collateral with a borrowable asset under a defined set of parameters.
Network risk	Risk associated with the underlying network where Tydro is deployed, such as congestion, security vulnerabilities, or downtime.
Oracle	A service that provides external data such as asset prices to Tydro, used to value collateral and debt and to trigger liquidations. Tydro uses Chainlink.
Ray units	A unit of precision with 27 decimals used internally by Tydro for calculations such as interest and exchange rates.
Reserve factor	The share of borrow interest allocated to the protocol reserve rather than paid to suppliers, supporting long-term sustainability.
Risk admin	An entity responsible for adjusting risk parameters such as LTVs, borrow caps, and liquidation thresholds to keep the protocol aligned with market conditions.
Safety module	A staking mechanism where tokens are staked as insurance against a shortfall event, with stakers earning rewards but exposed to slashing.
Siloed borrowing	A restriction that allows certain assets to be borrowed only in isolation, mitigating risks from illiquid or volatile assets.
Superchain	A network of OP Stack chains that share standards and interoperability. Ink is part of the Optimism Superchain.
Supply	To deposit an asset into a market to earn interest from borrowers.
Supply cap	A limit on the total amount of a specific asset that can be supplied to the protocol. Helps control exposure to risky assets.
Tranche	A planned position type that splits a loan into senior and junior claims, where junior capital absorbs losses first. See Tranching.
USDC	A US dollar stablecoin. The loan asset in the launch market.
Utilization	The ratio of borrowed assets to total supplied liquidity in a reserve. Higher utilization indicates stronger borrowing demand.
Vault	A planned product where managers deploy capital and run strategies on top of Tydro markets, following the ERC-4626 standard or an equivalent. See Vaults.