FAQs
General
Where are collateral assets deposited and positions settled?
Tenor provides a simple interface to the Morpho protocol, a non-custodial, self-executing protocol that matches lenders and borrowers at fixed interest rates. Collateral assets are deposited in Morpho's non-custodial protocol. Offers and the matching between lenders and borrowers is all executed in the Morpho protocol.
Tenor offers additional smart contracts are opt-in tools to facilitate the auto-renewal of positions according to user set policies and the execution of offers with specific callbacks and conditions.
Position Management
Can you repay a position before maturity?
Yes. Borrowers can always repay their position in full before maturity. Borrowers may also exit their positions prior to maturity at the current market rate subject to sufficient available liquidity.
What happens at maturity?
Borrowers can either extend their positions by opting into Tenor's non-custodial auto-renewal features to extend their borrow positions into longer-dated fixed rate maturities, or variable rate markets. To streamline this process, Tenor offers smart contract tools that make it simple for borrowers to manage their positions at maturity.
Liquidations
How do liquidation work?
Liquidation is a mechanism to mitigate the risk of bad debt and protect lenders’ capital. When an account becomes unhealthy, meaning its Loan-To-Value (LTV) on a given market exceeds the market’s Liquidation Loan-To-Value (LLTV), the account’s position can be liquidated.
What is Liquidation Price?
The liquidation price is the price of the collateral at which one’s position will become eligible for liquidation.
Liquidation price is visible on users’ position in the Morpho interface and has to be carefully monitored to avoid a position becoming unhealthy and facing liquidation.
Who performs liquidations?
Liquidation is permissionless on Morpho, anyone can perform a liquidation by repaying the account’s debt in exchange for the equivalent amount in the market collateral asset, along with an incentive.
How can I avoid liquidations?
You can avoid liquidation by keeping the health ratio of your position above 1. If necessary either by: depositing more collateral repaying partially or fully your debt Health Ratio and Collateral Liquidation price are key informations to monitor to ensure your position stays healthy.
Risks & Security
Read more about the risks of the Tenor platform here.
Oracle risk
Each Morpho market uses an oracle to track prices, set when the market is created. However, some oracles may be susceptible to price manipulation, which can cause liquidations or bad debt. Some oracles are more reliable than others. When evaluating an oracle, consider its security, reliability, and how often it updates prices, especially if it’s centralized.
Liquidation risk
Each Morpho market has a fixed Loan-to-Value (LLTV) limit. If your position’s value goes beyond this limit, your assets could be liquidated. When borrowing on Morpho, it’s important to choose the right market and regularly monitor your position to avoid liquidation.
Have Morpho and Tenor smart contracts been audited?
Yes. You can see past audits here. Smart contracts are risky and users should consult the Tenor risk disclosures.