# Terminology

## Inventory Access Layer

Nomial is an *Inventory Access Layer* for solvers.

An Inventory Access Layer allows users to collateralize on one chain and borrow inventory on many chains. Inventory is provided by passive liquidity providers. When accessing inventory, borrowers pay fees that accrue back to the pools and thus to liquidity providers.

## Inventory Pool

Inventory Pools are instances of the InventoryPool smart contract. They store LP capital. Borrowers borrow from InventoryPool instances. Each pool supports a single ERC20 token.

## Borrower

Borrowers request capital from the Nomial Inventory Access Layer. The protocol keeps track of the borrowers outstanding positions and collateral and then approves or denies the request.

## Liquidity Provider (LP)

Capital is provided by passive LP's. As repayments are made to pools, LP's earn their share of the interest paid by borrowers.

## Interest Rate

The protocol uses a two-slope interest rate based on utilization similar to Aave v3. Learn more on [Interest Rate Model](/interest-rate-model.md).

## Penalty Rate

When borrowing, there is a grace period (configurable, but intended to be less than 24 hours) where borrowers only accrue interest at the Interest Rate. After the grace period, the Penalty Rate applies. This Penalty rate is much higher than the normal interest rate. Since Nomial is intended to be used by solvers that need short term access to capital, this penalty rate exists to encourage quick repayment.

## Collateral

Borrowers need to post collateral. This collateral is used to enforce repayment of borrowed positions. Under normal operation, borrowers should be repaying their positions instead of the protocol pulling from their collateral. Collateral acts as a backstop if the borrowers does not repay their position. There is a 7 day waiting period for collateral withdrawal. The waiting ensures that borrows

## Collateral Pool

Collateral is stored in instances of the CollateralPool smart contract. They accept deposits and implement a time-lock withdrawal mechanism.

## Repayment

Borrowers close positions by repaying the principal and interest back to the pool.


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