> For the complete documentation index, see [llms.txt](https://lavarage.gitbook.io/lavarage/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://lavarage.gitbook.io/lavarage/platform/faqs/glossary.md).

# Glossary

**Loan-to-Value Ratio (“LTV”):**

Represents the proportion of the current loan size, including both the borrowed amount and accrued interest, to the collateral's market value, used to assess the risk of the investment.

**Return on Investment ("ROI"):** 

Calculates the efficiency of a trade by expressing the net gain as a percentage of the initial investment.

**Profit and Loss ("PnL"):** 

Reflects the overall outcome of an investment, quantifying the net difference between gains and costs associated with a position.

**Initial Margin:** 

Refers to the amount of your own asset that you use to start an investment before applying leverage.

**Initial Leverage:** 

This is determined by how much the total position size is magnified compared to the initial margin you use. It's a way to measure how much more you're investing beyond your own money through borrowing.

**Borrowed Amount:** 

The amount that is borrowed from the lending pool to open a position after leverage is applied.

**Position Size:** 

This is the total amount of the investment after leverage is applied. This includes both your initial margin (the amount that you own) and the borrowed amount from leverage.

**Liquidation Price:** 

When the price of your position is less than or equal to the liquidation price, your position will be at risk of liquidation.

**Liquidation LTV:** 

It is expressed as a percentage, representing the ratio of the loan amount (borrowed amount) to the total value of the collateral (your initial investment). When the current LTV is greater than or equal to the liquidation LTV, your position can be liquidated by the lender.

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