lTokens

Tokens are ERC-20 compliant tokens that track positions within the Layerlend. lTokens are transferrable and fungible, and can be redeemed for an underlying position provided there is sufficient liquidity and the position those tokens represent has not been designated for use as collateral.

Each market supported by the protocol, such as USDC or ETH, is represented by an lToken. The mToken is responsible for several key functions:

• Accepting new deposits (minting lTokens)

• Allowing withdrawals of assets from the protocol (redeeming/burning lTokens)

• Managing borrow requests for a specific asset

• Facilitating repayments for a specific market

• Handling liquidations for specific market positions

• Calculating reserve and seize shares to increase protocol reserves

When you liquidate an underwater loan on Layerlend, you settle a user's underwater position and can seize a portion or the entirety of their lTokens.