))
Don't Get Liquidated! - Explaining Over Collateralized DeFi Loans
Manage episode 337466163 series 3381606
Content provided by Part Time Economist. All podcast content including episodes, graphics, and podcast descriptions are uploaded and provided directly by Part Time Economist or their podcast platform partner. If you believe someone is using your copyrighted work without your permission, you can follow the process outlined here https://player.fm/legal.
Since DeFi protocols can't perform credit checks or assess the credit worthiness of borrowers using the same tools of traditional finance, they typically rely on loan over-collateralization to ensure that lenders will be able to receive their funds back. When borrowers' outstanding loan balances exceed their loan collateral value, they are "liquidated" by third parties that swoop in, repay the loan, and make a profit. In today's post, I'll explain why overcollateralized loans are essential to DeFi, how over-collateralized loans work, and how liquidations function. #crypto #defi #comp
54 episodes
Share
