MachFi
  • Introduction
  • SONIC REWARDS PROGRAM
    • Program Overview
    • Sonic Boom
    • Sonic Gems
    • Sonic Points
  • Contracts
    • Audit
      • Bug Bounty
    • Addresses
    • Asset Risk Parameters
  • Protocol
    • Overview
    • Mechanics
      • Depositing Assets
      • Borrowing Assets
      • Utilization rate
      • Interest Rate
      • Risk Management
      • Liquidation
      • Reserves
      • Reserve Factor
      • MachBoost
      • Oracles
  • Resources
    • Official Pages
    • Brand Kit
  • MachFi Guide
    • How to Deposit on MachFi
    • How to Borrow on MachFi
    • How to Manage Risk on MachFi
    • How to Leverage on MachFi
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Reserve Factor

The Reserve Factor is a valuable tool for managing volatile markets, as it can be adjusted at the asset level to create an additional buffer that contributes to the protocol's treasury. This parameter represents the portion of revenues generated from borrower interest payments that is retained by the protocol. These retained funds serve as a liquidity backstop or insurance fund and can also supplement the treasury in the future, subject to community input.

Essentially, the Reserve Factor defines the difference between what the protocol collects from borrowers and what it distributes to suppliers. Adjusting the reserve factor can impact borrower and supplier incentives, enabling the protocol to strategically encourage either borrowing or supplying behaviors as needed.

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Last updated 6 months ago