# Reserve

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A reserve is an instance of a token within a Tydro liquidity pool. Each reserve is governed by a set of parameters that manage risk and optimise liquidity.&#x20;

### **Key Reserve Parameters**

**Loan-to-Value (LTV)**\
The maximum amount that can be borrowed relative to the value of the collateral. For example, a 75 percent LTV allows borrowing up to 75 percent of the collateral’s value. Assets with zero percent LTV cannot be used as collateral.

**Liquidation Threshold**\
The point at which a position becomes at risk of liquidation. If the value of the collateral falls below this threshold, the position may be liquidated to repay the borrower's debt.

**Borrowing Enabled**\
Specifies whether users can borrow liquidity from this reserve.

**Caps**\
Supply and borrow caps limit the total amount of a token that can be supplied or borrowed from a reserve. These caps help manage liquidity and reduce exposure during volatile market conditions.

**Interest Rate Model**\
Interest rates in Tydro adjust dynamically based on the utilisation of liquidity. As more funds are borrowed, interest rates increase to ensure sufficient liquidity remains available for withdrawals and liquidations. Rates are determined by parameters that define the base rate and how steeply rates rise with utilisation.


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