> For the complete documentation index, see [llms.txt](https://docs.usefarlight.com/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.usefarlight.com/assets/collateral-tiers.md). # Collateral tiers and LTV limits How Farlight sorts collateral into four tiers by liquidity and oracle quality, and the origination ceiling, liquidation threshold and closed-market haircut that come with each tier. Two measurements place a token in a tier: the depth of its liquidity and the quality of its oracle. Ticker, issuer brand and popularity carry no weight. The tier then fixes three numbers for every loan against that token: the highest LTV allowed at origination, the LTV at which liquidation starts, and the haircut applied while the underlying market is closed. {% hint style="info" %} The values on this page are the parameters currently in force. They are held in the PolicyController and change only through the timelock; each change ships with a written rationale and an entry in the governance log. {% endhint %} ## The four tiers | Tier | Who is in it | Maximum LTV at origination (regular session) | Liquidation LTV | Haircut while market closed | Notes | | ----- | ---------------------------------------------------------------------------------------------------- | -------------------------------------------- | ------------------------------ | --------------------------- | ----------------------------------------------------------------- | | **A** | Index products and mega-caps: SPY, QQQ, AAPL, MSFT, NVDA | 55% | 70% | 10 points | Deepest DEX liquidity on Robinhood Chain | | **B** | Large-cap single names, roughly the 100 deepest by DEX liquidity | 45% | 60% | 10 points | | | **C** | The long tail: any other token with a live Chainlink feed | 30% | 45% | 15 points | Lenders opt in token by token | | **D** | Tokens without a live oracle: private-company tokens (SpaceX- or OpenAI-linked), where still offered | Set by the lender, 25% recommended ceiling | None. Default at maturity only | n/a | No automatic liquidation. Roadmap item, professional lenders only | ## Reading the three figures * The **origination ceiling** is the most LTV a loan can carry at the moment it is created. A request above it cannot be originated. Each lender's offer also states its own `maxLtvBps`, which must be at or below the tier value. A lender may be tighter than the tier and never looser. * The **liquidation threshold** is the LTV at which the health factor reads 1.0. The gap between the origination ceiling and the threshold is the borrower's room before a warning and, beyond it, an auction. * The **closed-market haircut** comes off both numbers whenever the Chainlink feed marks the market closed or the price has gone stale. A Tier A loan opened at 55% on a Friday afternoon is measured over the weekend against a liquidation threshold of 60%, not 70%. ## Caps per token Separately from its tier, every token has a **dollar-denominated cap** on the total principal that can be outstanding against it across all loans. Caps open conservatively, anchored to observed DEX depth and to how auctions have cleared, and rise as liquidation history accumulates. Telemetry, the public risk page, shows each token's current cap and the share of it in use. ## Moving between tiers A token's tier is a value stored in the PolicyController. It moves up or down on the basis of: * whether DEX depth on Robinhood Chain has held up over time, * the quality of the Chainlink feed (update cadence, deviation threshold, whether Data Streams are available), * how clearing prices in earlier liquidation auctions compared with the oracle, * issuer events or corporate actions. When the timelock runs out, a demotion takes effect immediately for new loans. Loans already open keep the terms they were originated on until maturity, except that their liquidation threshold moves to the new tier's value after a grace period announced alongside the change. ## Tier D, where there is no oracle Tier D holds tokens with no live price feed, which in practice means tokens tied to private companies. Loans against them are bilateral and negotiated between professionals. With no price to liquidate against there is **no automatic liquidation**; the only route to recovery is at maturity, when a borrower who has not repaid by the close of the grace window forfeits the collateral to the lenders. Tier D is a roadmap item restricted to `LENDER_PROFESSIONAL` and will get full documentation when it opens. --- # Agent Instructions This documentation is published with GitBook. GitBook is the documentation platform designed so that both humans and AI agents can read, navigate, and reason over technical content effectively. Learn more at gitbook.com. ## Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter, and the optional `goal` query parameter: ``` GET https://docs.usefarlight.com/assets/collateral-tiers.md?ask=&goal= ``` `ask` is the immediate question: it should be specific, self-contained, and written in natural language. `goal` is optional and describes the broader end goal you are ultimately trying to accomplish on behalf of the user. GitBook uses it to tailor the answer towards what is most useful for that goal. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.