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  • 👋Welcome to GLIF
    • Intro
    • History of GLIF and Filecoin DeFi
  • Storage Provider Economics
    • Use Cases
    • Storage Provider Equity
    • Storage Provider Liquidation Value
    • Storage Provider Earnings
    • Borrowing Limits
    • Guarantors
    • Withdraw funds
    • Rates & Payments
    • Quotas
    • Rule Enforcement
  • Agents
    • Agents
    • Owner and Operator Keys
    • Credentials
    • Add/Remove Miners
    • 3 Agent States
    • Helpful CLI commands
  • Token holder economics
    • How it works
    • Understand Collateral
    • Rewards & iFIL
    • Exits
    • Audits
    • Risks
  • More about the protocol
    • Agent Police
    • Agent Data Oracle
    • Decentralization
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On this page
  • Loan-to-value ratio
  • Debt-to-equity ratio
  • Debt-to-income ratio
  • Borrow limits
  • The Borrow Cycle
  1. Storage Provider Economics

Borrowing Limits

Storage Provider's borrowing limits

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Last updated 11 months ago

Before jumping into the limits of the Pool, it's important to understand three metrics: loan-to-value (LTV), debt-to-equity (DTE) and debt-to-income (DTI). The DTE and DTI ratios are used to limit the amount SPs can borrow from the Pool.

Loan-to-value ratio

The loan-to-value ratio - measures the amount of borrowed funds against the SP's .

LTV=borrowedFunds/liquidationValueLTV = borrowedFunds/liquidationValueLTV=borrowedFunds/liquidationValue

For example:

Borrowed Funds
Liquidation Value
LTV

0 FIL

1000 FIL

0%

500 FIL

1000 FIL

50%

1000 FIL

1000 FIL

100%

Debt-to-equity ratio

The debt-to-equity ratio - otherwise known as the "skin in the game" ratio - measures the amount of borrowed funds against the SP's .

DTE=borrowedFunds/equityValueDTE = borrowedFunds / equityValueDTE=borrowedFunds/equityValue

For example:

Borrowed Funds
Equity Value
Debt-to-equity

0 FIL

1000 FIL

0%

500 FIL

1000 FIL

50%

1000 FIL

1000 FIL

100%

Debt-to-income ratio

DTI=ExpectedWeeklyPayment/ExpectedWeeklyEarningsDTI = Expected Weekly Payment / Expected Weekly EarningsDTI=ExpectedWeeklyPayment/ExpectedWeeklyEarnings

For example:

Expected Weekly Payment
Expected Weekly Earnings
Debt-to-income

0 FIL

100 FIL

0%

25 FIL

100 FIL

25%

100 FIL

100 FIL

100%

Borrow limits

The Pool enforces two borrowing limits:

  1. LTV < 80% - the SP can only borrow an amount less than or equal to 80% of their liquidation value.

  2. DTE < 200% - the SP can only borrow an amount less than or equal to 2x the amount of equity they bring to the protocol. As the SP earns more equity through block rewards, it can continuously borrow more.

  3. DTI < 25% - the SP can only borrow an amount such that the weekly expected payment can be covered by 25% of the SP's weekly expected earnings.

Some examples of accepted/rejected borrow requests:

Borrow request
Expected LTV
Expected DTE
Expected DTI
Accept ✅ / Reject ❌

100 FIL

50%

110%

20%

✅

100 FIL

90%

150%

20%

❌ - LTV too high

100 FIL

75%

210%

10%

❌ - DTE too high

100 FIL

75%

80%

30%

❌ - DTI too high

The GLIF Website will be updated with an SP calculator, which will show each SP how much they can borrow.

The Borrow Cycle

The Pool is meant to grow with the SP. As the SP borrows funds and pledges them to the Filecoin network, their expected earnings increase, allowing them to borrow more. As the SP earns block rewards, its equity value increases, increasing the SP's borrow cap.

The debt-to-income ratio measures the expected weekly payment against the of the SP.

liquidation value
equity value
expected weekly earnings
The borrow cycle