# Terminology and Concepts

**Collateral** — Assets provided by the borrower to secure a loan.

**Principal** — The amount borrowed in a loan, denominated in the loan’s principal token.

**Max LTV** — The maximum loan-to-value ratio allowed for a loan, calculated as the ratio between the loan’s outstanding debt and the value of its collateral. It determines the maximum principal a borrower can obtain based on the collateral provided and serves as a reference for loan health throughout the loan’s lifetime.

**Origination fee** — A fee charged when a loan is originated, calculated as a percentage of the loan’s principal.

**APR** — Annual Percentage Rate. The annualized interest rate applied to the loan’s outstanding principal, expressed as a percentage.

**Effective APR** — The annualized rate that reflects the total cost of a loan, including interest and the origination fee.

**Maturity** — The date and time at which a loan becomes due. Failure to repay a loan by its maturity results in default.

**Request duration** — The period during which a loan request remains open and eligible to receive offers.

**Offer duration** — The period during which an offer remains active and can be accepted by a borrower.

**Open-ended** — A loan configuration with no fixed maturity date.

**Callable** — A loan feature that allows the lender to call the loan after a defined eligibility period, requiring repayment within the specified call repayment window.

**Liquidation LTV** — The loan-to-value ratio at which a loan becomes eligible for liquidation in loans with partial liquidation clauses. It defines the threshold at which liquidation can be triggered. Its value is always greater than the Max LTV.

**Partial liquidation** — A liquidation mechanism available only to loans with a partial liquidation clause, triggered when the loan’s current LTV reaches the liquidation LTV. In this case, only enough collateral is liquidated or claimed to reduce the loan’s LTV below the maximum allowed threshold.