# E-Mode

E-Mode (Efficiency Mode) is a feature that enables higher capital efficiency when borrowing correlated assets. When you supply collateral and borrow an asset within the same risk category, the third-party protocol on WLFI Markets automatically applies a more favorable liquidation threshold.

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**Automatic activation**

E-Mode activates automatically based on the assets in your position. There's no manual toggle - simply supply and borrow correlated assets to benefit from enhanced liquidation thresholds.
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## How E-Mode works

Dolomite groups assets into risk categories based on their price correlation. When all assets in your position belong to the same category, the protocol applies optimized margin requirements.

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**Supported E-Mode categories**

While Dolomite supports additional E-Mode categories across its deployments, WLFI Markets currently supports two modes:

1. **Stablecoin E-Mode** - For positions containing only USD-pegged stablecoins
2. **Ethereum-correlated E-Mode** - For positions containing only ETH and ETH-derivative assets
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**Default margin requirement**

If no E-Mode is active, WLFI Markets uses the default margin requirement (117.65% / 85% liquidation threshold). Mixing assets from different categories in any position will cause the entire position to use the default margin requirement.
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| Mode                           | Assets           | Margin requirement | Liquidation threshold |
| ------------------------------ | ---------------- | ------------------ | --------------------- |
| **Stablecoin E-Mode**          | USD1, USDC, USDT | Lower              | Higher                |
| **Ethereum-Correlated E-Mode** | ETH              | Lower              | Higher                |

### Example: Stablecoin E-Mode

If you supply **USD1** as collateral and borrow **USDT**, both assets are stablecoins pegged to USD. Because their prices move together, the risk of liquidation due to price divergence is minimal. E-Mode recognizes this correlation and allows you to borrow more against your collateral.

If you then borrow **ETH** in the same position, the margin requirement automatically adjusts to the default rate since ETH is not correlated with stablecoins.

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## Asset categories

WLFI Markets on Ethereum Mainnet supports the following asset categories for E-Mode:

### Stablecoin E-Mode

<table><thead><tr><th width="120">Market ID</th><th width="120">Asset</th><th>Description</th></tr></thead><tbody><tr><td>1</td><td>USD1</td><td>World Liberty Financial's USD-backed stablecoin</td></tr><tr><td>2</td><td>USDC</td><td>Circle's USD Coin</td></tr><tr><td>5</td><td>USDT</td><td>Tether USD</td></tr></tbody></table>

Positions containing only stablecoins benefit from E-Mode's enhanced liquidation threshold. Borrowing one stablecoin against another stablecoin as collateral qualifies for this mode.

### Ethereum-correlated E-Mode

<table><thead><tr><th width="120">Market ID</th><th width="120">Asset</th><th>Description</th></tr></thead><tbody><tr><td>0</td><td>ETH</td><td>Ethereum</td></tr></tbody></table>

Positions containing only ETH-correlated assets benefit from enhanced liquidation threshold.

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**Coming soon**

For now, WLFI Markets only supports supplying ETH (which will be automatically wrapped to WETH) in this category. Additional ETH-derivative assets will be added in the future.
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## Benefits of E-Mode

<table><thead><tr><th width="200">Benefit</th><th>Description</th></tr></thead><tbody><tr><td><strong>Higher Borrowing Power</strong></td><td>Borrow more against your collateral when using correlated assets</td></tr><tr><td><strong>Capital Efficiency</strong></td><td>Optimize your positions without additional collateral</td></tr><tr><td><strong>Automatic Application</strong></td><td>No configuration needed—E-Mode applies based on your position composition</td></tr><tr><td><strong>Flexible Positions</strong></td><td>Add non-correlated assets anytime; the margin requirement adjusts automatically</td></tr></tbody></table>

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## E-Mode and liquidation risk

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**Important**

While E-Mode allows higher liquidation thresholds, it does not eliminate liquidation risk. Even correlated assets can experience temporary price divergence. Monitor your collateral ratio and maintain appropriate buffers.
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When E-Mode is active, your liquidation threshold remains tied to the enhanced margin requirements. If your position's collateral ratio drops below 1.00, it becomes eligible for liquidation regardless of whether E-Mode is active.

### Best practices

* **Monitor your collateral ratio** regularly, especially during periods of high market volatility
* **Maintain a buffer** above the minimum collateralization threshold
* **Understand the assets** in your position and their correlation dynamics

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## Technical details

E-Mode is provided by Dolomite's Account Risk Override system. The protocol evaluates your position's composition on every transaction and applies the appropriate margin category automatically.

| Mode                           | Minimum collateralization | Liquidation threshold |
| ------------------------------ | ------------------------- | --------------------- |
| **Default**                    | 117.65%                   | 85%                   |
| **Stablecoin E-Mode**          | Enhanced                  | Higher                |
| **Ethereum-Correlated E-Mode** | Enhanced                  | Higher                |

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For more technical information about risk parameters and margin calculations, visit the [Dolomite Risk Management Documentation](https://docs.dolomite.io/risk-management).
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