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Research field guide

Loan-to-value versus liquidation threshold

The maximum borrowing ratio and liquidation threshold serve different purposes. Borrow capacity is an entry constraint; the liquidation threshold is used in collateral coverage tests.

A worked distinction

With 10,000 USD collateral, a hypothetical 75% borrowing limit allows 7,500 USD debt. An 80% liquidation threshold contributes 8,000 USD to the health-factor numerator. Swapping these two percentages produces the wrong borrowing and liquidation scenarios.

What to verify in your own analysis

Read parameters for the actual asset and market, including mode-specific settings. Stable debt units can still grow with interest, and collateral prices can change before a repair transaction settles.

Write down the market or protocol identifier, units, observation window and data source before comparing outputs. Keep unavailable values distinct from zero. Capture a baseline and change one assumption at a time so the resulting difference can be explained.

Use the linked working tools

Open the related tools below to inspect actual public observations or calculate a local scenario. The numerical example above is illustrative, not a current quote. Export the result together with its assumptions if you need a reproducible research record.

The review checklist records what you checked in this tab. Completion measures your own notes, not whether an investment is safe, suitable or profitable.

Primary documentation

Research review record

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