Key Concepts
The core ideas that appear across Avana's Borrow Spoke, valuation, and liquidation docs.
Core Insight
An LP position is productive collateral, not just a static token balance. Its value depends on the underlying assets, pool composition, accrued fees, liquidity structure, and how much value can realistically be recovered during liquidation.
Why this matters: Avana is built around the idea that LP collateral needs market-specific underwriting, not a one-size-fits-all asset model.
Borrowing Model
Users deposit supported LP positions into a Borrow Spoke. The positions remain active in their pools while the protocol takes custody for collateral accounting.
Each approved LP position is valued independently. Its discounted contribution is added to the user's total borrowing capacity inside that Borrow Spoke.
When the user borrows, the spoke draws liquidity from the Hub. This keeps LP-specific risk inside the spoke while shared capital remains coordinated at the Hub layer.
Oracle & Valuation
Avana values LP collateral conservatively. External asset prices anchor the underlying tokens, while pool data and position-state inputs are used to reconstruct the LP exposure instead of trusting raw AMM spot state.
- Underlying asset prices from robust external feeds
- Pool inventory split or range-aware position decomposition
- Accrued fees recognized separately from principal liquidity
- Recovery haircuts for unwind slippage, impermanent loss, and stressed liquidation
Borrowing Capacity
Borrowing power is not assigned to the account wholesale or to the pool wholesale. It is built from the sum of position-level contributions inside a Borrow Spoke after collateral factors and pool-specific risk controls are applied.
Canonical reference: see Collateral Factors for the full position-by-position borrowing-capacity model.
Health & Liquidation
A Borrow Spoke continuously compares adjusted collateral value with outstanding debt. If market moves, oracle verification, or position changes reduce the user's remaining borrowing headroom too far, the position approaches liquidation eligibility.
Health monitoring and liquidation both use the same underlying valuation engine, which is why Avana treats pricing, collateral factors, and liquidation routing as one joined risk system rather than separate modules.
Fee Treatment
LP positions may continue accruing trading fees while they are used as collateral. Accrued fees can be recognized in valuation and, subject to health checks, claimed without fully exiting the LP principal.
Related docs: the canonical details live in Price Oracles and Claim LP Fees.