Terminology

• Collateral Debt Position (CDP): Unit of debt position or loan made up of a collateral and debt amount.

• eBTC: Synthetic Bitcoin asset minted by opening a CDP backed by stETH.

• Collateral Ratio (CR): The ratio between the value of a given collateral and the debt associated with it (CR = Collateral Value / Debt Value).

• Total Collateral Ratio (TCR): The ratio between the value of the total collateral of the system and the total debt emitted by it (TCR = System’s Total Collateral Value / System’s Total Debt Value). During Recovery Mode, this ratio becomes the liquidation threshold.

• Individual Collateral Ratio (ICR): The ratio between the value of the collateral and the debt of a specific CDP (ICR = CDP’s Collateral Value / CDP’s Debt Value).

• Minimum Collateral Ratio (MCR): The minimum collateral ratio that a CDP must maintain to avoid getting liquidated during Normal Mode (Defined at 110%). It is hence, also the minimum collateral ratio at which a CDP can be opened during this mode.

• Critical Collateral Ratio (CCR): The collateral ratio that, if the TCR reaches, triggers Recovery Mode (Defined at 125%). Also, this ratio defines the minimum collateralization at which it can be borrowed during Recovery Mode.

• Minimum CDP Size: Refers to the minimum collateral amount that must back all CDPs at all times (Defined at 2 stETH).

• Protocol Yield Share (PYS): A percentage taken off of all CDP's collateral yield as source of revenue for the protocol.

• Gas Stipend: An additional collateral amount used as an insurance to cover the liquidation cost of CDP if necessary. The Gas stipend is independent of the CDP's collateral, it is not considered for its ICR and it does not incur a PYS. It is returned to the borrower upon full debt repayment (Defined at 0.2 stETH).

• Grace Period: Period of time, triggerable at the beginning of the Recovery Mode, during which liquidations are blocked (Defined at 15 minutes).