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Glossary · O
Over-Collateralised
A borrowing position or stablecoin design where the value of collateral deposited exceeds the value of assets borrowed. For example, depositing $150 of ETH to borrow $100 of USDC is 150% collateralised (50% over-collateralised). Over-collateralisation is required in DeFi lending because there is no credit scoring or legal enforcement — the excess collateral provides a buffer against price volatility before liquidation.
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