Efficiency Mode (eMode)

The High Efficiency mode feature (or "eMode") is designed to maximise capital efficiency when collateral and borrowed assets are correlated in price.

The RISK_ADMINS and POOL_ADMIN, set by Maker Governace, can configure a maximum of 255 eMode categories, with each EModeCategory having following risk management parameters:

LTV (Loan to value)
Liquidation threshold
Liquidation bonus
A custom price oracle (optional)

All Assets listed on SparkLend can be set to any of the pre-configured eModeCategory by the RISK_ADMINS or POOL_ADMIN.

eMode also offers the possibility of introducing a specific price oracle for a certain category.

How it works?

If the user has supplied liquidity to the protocol, the user eMode category is set to 0 by default.

The protocol allows user to set the user eMode category to any of the eModeCategories configured by the PoolConfigurator given the following conditions holds true:

all the borrowed assets of the user are in the chosen category.
changing eMode doesn’t leave user position under-collateralised