What Is Carillonium finance (CAROM)?

What Is Carillonium finance (CAROM)? Complete Guide Review About Carillonium finance.

What Is Carillonium finance (CAROM)?

Publishing a transaction to a blockchain is time consuming. You need to wait for the transaction to be included in a block, and then depending on how much money is moved, you need to wait for more confirmations. Waiting for confirmations means that you wait for enough blocks to be added to the blockchain for enough security. Trying to avoid this time-consuming process as much as possible is why we use channels.

Carillonium finance Channels are two party relationships recorded on the blockchain. Each channel has a finite amount of money it controls, just like an account. Once two people have a channel together, they can instantly move the money inside the channel back and forth. This is much faster than publishing a transaction to the blockchain and waiting for confirmations. When the channel is closed, the money goes back to the accounts that created it according to the final distribution of money in the channel.

Carillonium finance Storage Key Points

Coin BasicInformation
Coin NameCarillonium finance
Short NameCAROM
Circulating SupplyN/A
Total SupplyN/A
Source CodeClick Here To View Source Code
ExplorersClick Here To View Explorers
Twitter PageClick Here To Visit Twitter Group
WhitepaperClick Here To View
Support24/7
Official Project WebsiteClick Here To Visit Project Website

Volatility

High price volatility of an asset can negatively affect collateral, threatening solvency of the Iron Lend protocol. The collateral must cover loan liabilities in order to remain solvent. The risk of the collateral falling below the loan amounts can be mitigated through the level of coverage required, otherwise known as the Collateral Factor. It also affects the liquidation process as the margin for liquidators needs to allow for profit.

Market Capitalisation

The market capitalization represents the size of the market, which is important when it comes to liquidating collateral. This can be mitigated through the liquidation parameters: the smaller the market cap, the higher the incentives. The overall risk rating is used to calibrate the Reserve Factor with factors ranging from 7% for the less risky assets to 25% for the riskiest.

You may temporarily be unable to withdraw

As with every protocol based on lending pools, the lender may not be able to withdraw all of his funds at a certain point in time if there isn’t enough liquidity in the pool. Iron Finance uses a dynamic interest rate model that reduces the likelihood of funds not being withdraw able for a prolonged period of time.

Carillonium finance To put it simply. When borrowers borrow a lot, the utilization rate goes up. The interest rate will then increase to incentivize lending, while simultaneously disincentivizing borrowers from borrowing more.

Each currency added to the Iron Finance protocol as collateral increases the protocol risk of insolvency

From a financial perspective, the assets of the Iron Finance protocol are the collaterals, while the liabilities are the loaned amounts. The underlying currencies of assets and liabilities often differ, with loans mostly taken in stable coins and backed by volatile tokens. This means the protocol is heavily exposed to the failure of supported token systems as well as market fluctuations.

When adding a currency to the protocol, significant controls are required to ensure the currency will add more value than risk. Only currencies with a worthy product and significant community are considered. The currency risk assessment explores whether the currencies represent a reasonable amount of risk for the protocol, calibrating the currencies parameters to mitigate those risks.

Borrowing Risk

When you use your LP tokens as collateral to require a loan or enter in a leverage position on Iron Finance, your collateral is always at stake and it may be liquidated when certain conditions are met. Before requiring a loan, the application will show an estimation of the liquidation prices. When the market price crosses the liquidation prices, your collateral may be liquidated in order to repay your loan.

Carillonium finance Please notice that the liquidation prices are not fixed and may change as your loan size increases. To put it simply When borrowers borrow a lot, the utilization rate goes up. The interest rate will then increase to incentivize lending, while simultaneously disincentivizing borrowers from borrowing more.