Collateral Ratio
The ratio of collateral value to debt, determining position health.
The ratio of collateral value to debt, determining position health.
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Sep 2026 · نقاط الحداثة: 50%
What is Collateral Ratio?
The ratio of collateral value to debt, determining position health.
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- concept
- Type
- Authority Node
- المصادر
- 1
In over-collateralized lending, a borrower deposits more collateral than the loan amount — e.g., 150% means $150 of collateral backs $100 of debt. If the ratio falls below a liquidation threshold due to price declines, the position can be l
The collateral ratio is the core risk metric of DeFi lending and collateralized stablecoins. Higher ratios mean safer positions but lower capital efficiency; lower ratios risk insolvency during volatility. Understanding ratios helps borrowe
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ذات صلة
1. What Is a Collateral Ratio
A collateral ratio is the value of collateral backing a loan or stablecoin divided by the value of the debt it secures, usually expressed as a percentage. It measures the safety buffer protecting lenders and stablecoin holders.
2. How It Works
In over-collateralized lending, a borrower deposits more collateral than the loan amount — e.g., 150% means $150 of collateral backs $100 of debt. If the ratio falls below a liquidation threshold due to price declines, the position can be liquidated. Stablecoins like DAI maintain ratios above 100% through a combination of collateral types and liquidation incentives.
3. Why It Matters
The collateral ratio is the core risk metric of DeFi lending and collateralized stablecoins. Higher ratios mean safer positions but lower capital efficiency; lower ratios risk insolvency during volatility. Understanding ratios helps borrowers manage liquidation risk and users evaluate stablecoin safety.
4. Key Facts
- Typical liquidation thresholds: 110-150%
- DAI's collateralization ratio historically stays well above 100%
- Ratios are monitored continuously by bots and liquidators
- Interest accrual can push a ratio below threshold even without price moves
5. Related Concepts
- auto-liquidation
- liquidation-price
- stablecoin
- staking-derivative
Frequently Asked Questions
What is Collateral Ratio?
The ratio of collateral value to debt, determining position health.
How does Collateral Ratio work?
A collateral ratio is the value of collateral backing a loan or stablecoin divided by the value of the debt it secures, usually expressed as a percentage. It measures the safety buffer protecting lenders and stablecoin holders. In over-collateralized lending, a borrower deposits more collateral tha
Why does Collateral Ratio matter in Web3?
- liquidation-price - stablecoin - staking-derivative