> For the complete documentation index, see [llms.txt](https://docs.ontorium.io/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.ontorium.io/ontorium-stack-overview/financial-layer/liquidity-collateral-and-borrowing.md).

# Liquidity, Collateral and Borrowing

#### **Liquidity, Collateral and Borrowing**

AQUA operates as a two-sided lending market where users can supply assets to earn yield or deposit collateral to access borrowing capacity.

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#### **Supplying Liquidity**

Users can supply supported assets such as OXAU, USDC, and USDT to AQUA lending pools. Supplied assets earn yield generated from borrowing activity within the protocol. Interest rates are variable and are determined by the utilization rate of each asset pool, adjusting dynamically as borrowing demand changes relative to available supply.

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#### **Collateral and Borrowing**

Users may deposit OXAU as collateral to borrow supported assets within AQUA. 

The following parameters apply:

| Parameter             | OXAU             | USDC             | USDT             |
| --------------------- | ---------------- | ---------------- | ---------------- |
| Max LTV               | 65%              | 75%              | 75%              |
| Liquidation Threshold | 75%              | 88%              | 88%              |
| Liquidation Bonus     | 5%               | 4.5%             | 4.5%             |
| Borrow Assets         | OXAU, USDC, USDT | OXAU, USDC, USDT | OXAU, USDC, USDT |
| Reserve Factor        | 10%              | 10%              | 10%              |

***

#### **Liquidation**

If the value of a borrower's collateral falls and the position exceeds the liquidation threshold of 85%, the position becomes eligible for liquidation. Liquidation may occur automatically and without prior notice. Users are solely responsible for monitoring their collateral ratio and managing their positions accordingly.