The 3 questions
When you borrow in Varla, three things determine your risk:- How much can I borrow? → LTV Tiers
- When can I be liquidated? → Health Factor
- What if oracle data is missing? → Oracles
If your health factor drops below 1.0, you can be liquidated. Everything else flows from this.
How Varla protects lenders
| Protection | What it does |
|---|---|
| Tiered LTV | Limits borrow power based on collateral risk |
| Conservative pricing | Uses min(spot, TWAP) — no inflated collateral values |
| Early-closure decay | Reduces LTV as markets approach resolution |
| Liquidation bonus | Incentivizes liquidators to clear bad positions quickly |
| Reserve fund | 10% of interest as first-loss coverage |
What borrowers should watch
- Your health factor (stay above 1.0, ideally above 1.2)
- Time to market resolution (early-closure rules kick in 7 days before)
- Oracle status (if a price becomes unavailable, that collateral = $0 borrow power)