Lending Mechanics
Collateral Factor
The percentage of an asset's value that can be used as borrowing power. If ETH has a collateral factor of 75%, depositing $10,000 of ETH allows borrowing up to $7,500.
Why Collateral Factor Matters
Understanding collateral factor is essential for anyone participating in crypto lending or DeFi markets. This concept directly impacts how you evaluate platforms, manage risk, and optimize returns.
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