Reserve Factor
The Reserve Factor is a useful parameter for navigating volatile markets since it can be set at the asset level, this additional buffer will be contributed to the treasury.
It represents the portion of protocol revenues (paid by borrowers as interest) retained by the protocol as a liquidity backstop or insurance fund and potentially to supplement the treasury in the future based on community feedback.
It is also the delta between what the protocol takes in from borrowers and what it pays out to suppliers. A change in reserve factor could be passed along to borrowers as an incentive. Therefore, the reserve factor could be used to incentivize either borrow or supply behaviors.
The Reserve Factors can be found in the table below:
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