Otomato Glossary — DeFi & On-chain Terms Explained

The ratio of weighted collateral value to borrowed value on lending protocols. When it falls below 1, your position can be liquidated.

When a lending protocol sells part of your collateral to repay your debt because your position crossed its liquidation threshold.

When an asset designed to track a reference price, such as a stablecoin or a liquid staking token, trades meaningfully away from that price.

Liquidation Loan-To-Value, the single fixed threshold in a Morpho Blue market at which a borrowing position becomes liquidatable. Each market has exactly one immutable LLTV.

An isolated market is a lending market that pairs a specific collateral asset with a specific borrow asset under its own risk parameters, so trouble in one market cannot spread to the others.

Long-tail collateral refers to lower-liquidity, higher-volatility, smaller-cap tokens posted as collateral, as opposed to blue-chip assets like ETH, wBTC, and major stablecoins.

The variable interest rate paid to suppliers on lending protocols. It scales with utilization of the underlying market.

The annualized interest you pay on assets borrowed from a lending protocol. It is set by how much of the market is borrowed, it is variable, and it can move inside a single block.

Aave V3's single safety number for a borrow position: total collateral value multiplied by the weighted average liquidation threshold, divided by total borrow value. At or below 1 the position can be liquidated by anyone.

Revert Lend loan health compares the value of your Uniswap V3 LP position, after collateral factors, against your outstanding USDC debt. Once the debt passes that value, anyone can liquidate.

On perp DEXes, a periodic payment between longs and shorts that anchors the perpetual price to the underlying spot price.

The difference between the expected price of a trade and the price at which it actually executes.

Perpetual futures are derivatives that track an asset's price with no expiry date, so a position can stay open indefinitely. A funding rate mechanism keeps the contract price tethered to spot.

Maintenance margin is the minimum equity, expressed as a fraction of your position notional, that you must keep in a leveraged perp position before it is liquidated. Fall below it and liquidation triggers.

The hourly payment exchanged between long and short perp traders on Hyperliquid. Positive funding means longs pay shorts, negative funding means shorts pay longs.

Hyperliquid liquidates a position by sending a market order for its full size to the order book once account equity falls below maintenance margin. Positions above 100,000 USDC are hit 20 percent at a time instead.

The opportunity cost of providing liquidity to an AMM pool versus simply holding the two assets in your wallet.

Pendle Principal Token. Represents the principal of a yield-bearing asset, redeemable 1:1 at maturity. Trades at a discount that converges to par.

Pendle Yield Token. Represents the future yield of a yield-bearing asset over a fixed period. Decays to zero at maturity.

Deposit vaults where a curator allocates pooled funds across multiple Morpho Blue markets under a risk policy. Depositors hold one vault token and earn a blended yield.

The implied rate is the fixed annualized yield baked into a Pendle PT price: buy the principal token at a discount today, redeem it for the full underlying at maturity, and the gap is your locked-in return.

A recursive borrowing strategy where you repeatedly deposit collateral, borrow against it, and redeposit to amplify exposure or yield. It magnifies returns and liquidation risk in equal measure.

A Uniswap V3 design where liquidity providers allocate capital to a chosen price range instead of the entire price curve. Capital earns fees only while the price stays inside that range.

The swap fee rate a Uniswap V3 pool charges traders and pays to liquidity providers. Each pool is created at one fixed tier, commonly 0.01%, 0.05%, 0.30%, or 1.00%.

The lower and upper price bounds a liquidity provider selects for a Uniswap V3 position. The position earns fees only while the market price sits inside this range.