Loan Policy
For users of Neko Network, when you read the contents below, please consider all MAZE as NEKO. They are identical.
The loan policy is similar to the risk controlling policy of AAVE. As there is no interest cost in Maze, the risk parameters and their calculations are slightly different.

# Borrow Account

## Loan to Value (LTV)

The Loan to Value (LTV) ratio defines the maximum amount of currency that can be borrowed with a specific collateral. It’s expressed in percentage: at LTV=75%, for every 1 ETH worth of collateral, borrowers will be able to borrow 0.75 ETH worth of the corresponding currency. Once a loan is taken, the LTV evolves with market conditions.
See the parameters here.

## Borrow Credit

Your Borrow Credit is the total balance available for you borrow from the protocol. It is generated once you have effective supply (the collaterals) in Funding.
$V_{borrowcredit}=\sum_{i=1}^{n} (V_{collateral(i)}*LTV_{(i)})$

# Liquidation

## Liquidation Threshold

The liquidation threshold is the percentage at which a loan is defined as under-collateralized. For example, a Liquidation threshold of 80% means that if the value rises above 80% of the collateral, the loan is under-collateralized and could be liquidated.
The delta between the LTV and the Liquidation Threshold is a safety cushion for borrowers.
See the parameters here.

## Health Factor

Health Factor is to determine if an account is under-watered and should be liquidated (Health Factor < 1).
$R_{healthfactor}=(\sum_{i=1}^{n} (V_{collateral(i)}*R_{liqthreshold(i)}))/V_{borrowedbalance}$

## Liquidation Bonus (Penalty)

Bonus on the price of assets of the collateral when liquidators purchase it as part of the liquidation of a loan that has passed the liquidation threshold.