All termsDeFi and RWA IntegrationWorth knowing
Overcollateralization
Overcollateralization means providing collateral worth more than the amount being borrowed or the obligation it supports. For example, a borrower might provide $150 of eligible collateral to support a $100 loan.
Why it matters to you
Collateral values can fall. Requiring collateral worth more than the loan provides a buffer against changes in value, but it does not remove the possibility of losses if prices fall quickly or the collateral cannot be sold efficiently.
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