What is an ibToken in Alpha Homora V2?

An ibToken is the interest-bearing receipt token a lender receives when depositing an asset into an Alpha Homora V2 lending pool. Its redemption value grows as borrowers pay interest, so the token balance stays constant while its worth increases.

What does debt ratio mean?

Debt ratio expresses how close a position is to liquidation. It compares the current value of borrowed assets to the liquidation-adjusted value of the position's collateral. When it reaches 100 percent, the position becomes liquidatable.

What is a spell contract?

A spell is a whitelisted helper contract that encodes exactly which actions a position may perform with a given external protocol, such as adding liquidity to a specific pool and staking the LP token. Spells limit the surface area a position can touch.

What is amplified impermanent loss?

Impermanent loss is the divergence loss suffered by a liquidity provider when the two pooled assets change in relative price. With leverage, the loss applies to the whole position rather than only your equity, so it is multiplied by the leverage factor.

What is a liquidation bonus?

It is the discount a liquidator receives when repaying part of a position's debt and seizing its collateral. The bonus is what makes third parties willing to keep the system solvent, and it is paid out of the liquidated user's equity.

Alpha Homora V2 glossary of terms

Every term used across this Alpha Homora V2 resource, defined in plain English. Use it as a companion while reading the guides and articles.

Why a glossary matters for Alpha Homora V2

Leveraged yield farming carries an unusually dense vocabulary. A single sentence in the documentation can contain four terms — ibToken, spell, debt ratio, liquidation threshold — each of which hides a design decision. Readers who skip those definitions tend to form a mental model that is almost right, which is the most dangerous kind when leverage is involved.

The definitions below are deliberately written for humans rather than auditors. Where a term has a precise on-chain meaning in Alpha Homora V2 as well as a general DeFi meaning, both are noted. For the mechanics behind these words, read how Alpha Homora V2 works; for their consequences, read the risks guide.

Using the vocabulary correctly

Precision matters when discussing leverage. 'Leverage' in Alpha Homora V2 means position size divided by equity, so 3x leverage on 1,000 dollars of collateral means a 3,000 dollar position and 2,000 dollars of debt. 'Debt ratio' is not the same as leverage: it compares borrowed value to the liquidation-adjusted collateral value, and it moves as prices move even when the leverage multiplier chosen at open never changes.

Similarly, 'yield' should always be qualified. Gross farm APY, net APY after borrow interest, and realised return after impermanent loss and fees are three different numbers, and the gap between them widens with leverage. The fees and APY article shows the full calculation with worked examples.

Alpha Homora V2: The second generation of Alpha Venture DAO's leveraged yield farming protocol, launched in 2021, supporting multi-asset borrowing, position NFTs and integrations with external money markets and AMMs.
HomoraBank: The core Alpha Homora V2 contract. It holds lending pools, tracks every position's collateral and debt, executes spells and enforces the debt-ratio rules that trigger liquidation.
ibToken: Interest-bearing token issued to lenders who supply assets to an Alpha Homora V2 lending pool. Its value per token appreciates as borrowers pay interest.
Spell: A whitelisted contract that defines the permitted interactions between a position and an external protocol, for example adding liquidity to a particular pool and staking the resulting LP token.
Position NFT: In V2 each farming position is represented as a non-fungible token, making positions transferable and individually accountable rather than pooled together.
Leverage: Total position size divided by the user's own equity. At 3x leverage, one third of the position is user capital and two thirds is borrowed.
Debt ratio: The ratio of borrowed value to liquidation-adjusted collateral value. Rising debt ratio means rising liquidation risk.
Liquidation threshold: The debt ratio at which anyone may liquidate part of a position. Thresholds are stricter for volatile assets than for stablecoins.
Liquidation bonus: The discount a liquidator receives on seized collateral, paid from the liquidated position's equity, which incentivises timely liquidations.
Impermanent loss: The value lost by a liquidity provider relative to simply holding the two assets, caused by divergence in their relative prices. Leverage multiplies its impact on equity.
Iron Bank: A protocol-to-protocol lending market that Alpha Homora V2 integrated with for additional borrowing liquidity. The integration was involved in the February 2021 exploit.
Oracle: The price feed a protocol relies on to value collateral and debt. Alpha Homora V2 used aggregated and LP-aware oracles to reduce manipulation risk.
Utilisation rate: The share of a lending pool that is currently borrowed. Higher utilisation raises borrowing interest, which directly reduces a leveraged farmer's net yield.
Delta-neutral farming: A strategy that combines a leveraged farming position with an offsetting exposure so that the overall portfolio is roughly insensitive to the price of the volatile asset.
Total value locked (TVL): The aggregate value of assets deposited in a protocol. For Alpha Homora V2 it counts both lender deposits and farming collateral.
ALPHA token: The governance and incentive token of Alpha Venture DAO, the organisation that built Alpha Homora V1 and V2.

Alpha Homora V2 compared with other leveraged yield protocols

A side-by-side view of how Alpha Homora V2 positions itself against the best-known alternatives for leveraged farming and undercollateralised borrowing.

Alpha Homora V2 compared with other leveraged yield protocols
Protocol	Model	Typical max leverage	Main risk to watch
Alpha Homora V2	Leveraged LP farming with pooled lending	Up to ~3x on most pools	Debt-ratio liquidation plus impermanent loss
Alpaca Finance	Leveraged farming on BNB Chain and beyond	Up to ~6x on stable pairs	Higher leverage compresses the liquidation buffer
Gearbox	Credit accounts with composable strategies	Up to ~10x	Strategy whitelisting and cross-protocol dependency
Aave / Iron Bank	Overcollateralised lending only	No native farming leverage	Rate spikes and collateral volatility

Frequently asked questions about Alpha Homora V2

What is an ibToken in Alpha Homora V2?: An ibToken is the interest-bearing receipt token a lender receives when depositing an asset into an Alpha Homora V2 lending pool. Its redemption value grows as borrowers pay interest, so the token balance stays constant while its worth increases.
What does debt ratio mean?: Debt ratio expresses how close a position is to liquidation. It compares the current value of borrowed assets to the liquidation-adjusted value of the position's collateral. When it reaches 100 percent, the position becomes liquidatable.
What is a spell contract?: A spell is a whitelisted helper contract that encodes exactly which actions a position may perform with a given external protocol, such as adding liquidity to a specific pool and staking the LP token. Spells limit the surface area a position can touch.
What is amplified impermanent loss?: Impermanent loss is the divergence loss suffered by a liquidity provider when the two pooled assets change in relative price. With leverage, the loss applies to the whole position rather than only your equity, so it is multiplied by the leverage factor.
What is a liquidation bonus?: It is the discount a liquidator receives when repaying part of a position's debt and seizing its collateral. The bonus is what makes third parties willing to keep the system solvent, and it is paid out of the liquidated user's equity.