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Generally, its loans that are over-collateralized with crypto-assets. Use case being: I need cash now but I think ETH will go up and I don't want to sell mine,
by newacc9 5y ago
Generally, its loans that are over-collateralized with crypto-assets. Use case being: I need cash now but I think ETH will go up and I don't want to sell mine, instead I borrow stablecoin against my ETH using a DeFi app (probably on ethereum).
- the_optimist 5y agoDo you have an example of collateral management in this context?
- newacc9 5y agoIts all automated, so it depends on the contract, I assume if the USD value of ETH drops too much, the borrower gets margin called.
- the_optimist 5y agoCan you reference a specific margin call mechanism?
- newacc9 5y agoI found this for Compound. The liquidation mechanism is in section 11. https://zengo.com/understanding-compounds-liquidation/ https://zengo.com/understanding-compounds-liquidation/