Understanding Debt Thresholds on Teller
Teller pools have a set debt threshold percentage that determines the maximum portion of total liquidity that can be borrowed.
Debt Thresholds in Teller Pools
The debt threshold acts as a liquidity provider (LP) risk buffer for any collateral volatility, while still allowing LPs to withdraw their deposited funds. For borrowers, it defines how much of a pool’s total liquidity can be borrowed at once.
An example of how debt thresholds work:
- Debt threshold: 80%
- Pool utilization: 0%
- Available to borrow: 100k USDC
A maximum of 80k USDC can be borrowed. Once borrowed, that liquidity is unavailable for withdrawal until repayment occurs.
Each pool sets its own percentage – defaulted to 80% – visible in the pool’s info tab.
Impact on Withdrawals
Borrowing reduces the liquidity available for withdrawal. Teller’s rollover system keeps this in check by requiring borrowers to repay a portion of the principal when utilization reaches the limit.
Q: “If I deposit $1,000 and someone borrows $50, can I withdraw my full $1,000?”
A: Yes — as long as the pool’s idle liquidity is at least $1,000, the full deposit can be withdrawn even if $50 is borrowed.
Example:
- Debt threshold: 80%
- Pool utilization: 0%
- Available to borrow: 100k USDC
If a borrower takes $80k and lenders withdraw the remaining $20k, utilization reaches 100%. At the next rollover, the borrower can only extend 80% of the new liquidity base — $64k — and must repay $16k. This repayment returns liquidity to the pool, making it available for withdrawal by lenders.
Debt thresholds prevent borrowers from overextending while ensuring lenders regain access to their funds through partial repayments.
In practice:
- Liquidity cannot be withdrawn if it’s actively borrowed.
- Debt thresholds prevent pools from being overdrawn.
This design ensures that pools remain functional — borrowers can access funds while lenders still retain structured access to their liquidity.
The history graph shows how volume (green) and collateral (blue) fluctuate over time as borrowing increases and repayments occur.
Why It Matters
- Lenders: assured that liquidity cannot be fully drained
- Borrowers: predictable capacity for borrowing and rollover
- Pools: stay balanced, preventing liquidity lockups
About Teller
Teller enables loans for Bitcoin and 100+ altcoins. Debt thresholds are a key mechanism that keep lending pools liquid while allowing perpetual, non-liquidatable borrowing.