# Market

### Isolated Market

Affluent utilizes an isolated market model, where each liquidity pool operates independently without interacting with others. This design safeguards users in other markets from exposure to unforeseen risks while allowing new liquidity pools to be rapidly and securely deployed for any token.

### Supply & Borrow

Participants may supply liquidity to earn interest or post collateral to borrow assets. Borrowing limits and eligible assets are determined by the collateral mix the user provides.

<table><thead><tr><th width="232">Action</th><th>Description</th></tr></thead><tbody><tr><td><code>supply</code></td><td>Deposit assets into an Affluent Market.</td></tr><tr><td><code>withdraw</code></td><td>Redeem supplied assets.</td></tr><tr><td><code>borrow</code></td><td>Borrow against posted collateral.</td></tr><tr><td><code>repay</code></td><td>Repay borrowed assets.</td></tr><tr><td><code>liquidate</code></td><td>Seize collateral of under‑collateralized accounts.</td></tr></tbody></table>

#### Market Freeze

Market Freeze temporarily suspends risk-increasing transactions, such as borrowing or collateral withdrawal, during periods of unreliable market pricing. It is primarily triggered to protect lender capital, especially in RWA markets where fair value may be compromised or illiquid.

### Parameters

#### Asset‑Specific

<table><thead><tr><th width="233">Parameter</th><th>Purpose</th></tr></thead><tbody><tr><td><strong>Risk Factor</strong></td><td>Quantifies potential loss given market volatility and liquidity</td></tr><tr><td><strong>Liquidation Bonus</strong></td><td>Premium awarded to liquidators</td></tr><tr><td><strong>Interest Rate</strong></td><td>Curve governing borrow/supply rates (see <a data-mention href="interest-rate-model">interest-rate-model</a>)</td></tr><tr><td><strong>Underlying Asset</strong></td><td>Identifies the base asset for LSTs, LP tokens, etc.</td></tr></tbody></table>

#### **Market-Specific**

<table><thead><tr><th width="234">Parameter</th><th>Purpose</th></tr></thead><tbody><tr><td><strong>Borrow Asset</strong></td><td>Assets that can be borrowed from the market</td></tr><tr><td><strong>Supply Asset</strong></td><td>Assets accepted as collateral</td></tr><tr><td><strong>Max Risk Ratio</strong></td><td>Upper bound of account risk before new positions are blocked</td></tr><tr><td><strong>Max Leverage</strong></td><td>Leverage ceiling for opening or adjusting positions</td></tr><tr><td><strong>Liquidation Risk Ratio</strong></td><td>Risk ratio that triggers liquidation</td></tr><tr><td><strong>Liquidation Leverage</strong></td><td>Leverage level that triggers liquidation</td></tr></tbody></table>

### Account Risk Metrics

$$
Risk Ratio = \frac{\sum\_{i}{f\_i\cdot abs(S\_i -B\_i)}}{S -B}
$$

$$
Leverage = \frac{S}{S -B}
$$

Where:

* $$f\_i$$ : Risk Factor of asset *i*
* $$S\_i$$ : USD value of asset *i* supplied ( S : Total Supplied)
* $$B\_i$$ : USD value of asset *i* borrowed ( B : Total Borrowed)
  * DeFi positions (e.g., Liquid-staking token, LP tokens) are decomposed into underlying assets for risk calculations