🏋️Collateral Management
Asset Backing for Loan Security
What is Collateral?
Collateral is an asset that borrowers pledge to back a loan. It acts as a safety net for lenders, giving them the assurance that borrowers have a strong reason to repay their loans. If a borrower defaults, the lender can seize the collateral to recover the outstanding loan amount. Collateral can take various forms, such as real estate, vehicles, or other valuable assets, but it's a cornerstone of secured loans. It often allows borrowers to enjoy lower interest rates due to reduced lender risk.
The Dual Role of Collateral in Secured Finance
Collateral serves two main purposes in Secured Finance:
Risk Reduction: It reduces the risk of loan default. If a borrower's Loan-to-Value (LTV) ratio crosses a certain threshold, or if the collateral's value falls below the loan's required value, the loan becomes eligible for liquidation. This mechanism protects lenders and builds confidence in our platform.
Inclusivity: It eliminates the need for traditional credit checks, aligning with the DeFi ethos of open and inclusive financial services.
Collateral Currencies
Secured Finance accepts various cryptocurrencies as collateral, tailored to each blockchain network to provide users with the most effective and flexible experience.
Collateral Currencies on Ethereum, Arbitrum, Avalanche, Polygon zkEVM
On our existing four blockchain networks, we accept the following cryptocurrencies as collateral:
Wrapped Bitcoin (WBTC)
Ethereum (ETH)
USD Coin (USDC)
Wrapped Bitcoin (WBTC)
Bitcoin is the original cryptocurrency and is widely accepted and stable, making it an ideal choice for collateral. Wrapped Bitcoin represents Bitcoin on the Ethereum blockchain, allowing it to be used within Ethereum's DeFi ecosystem.
Ethereum (ETH)
Ethereum is a widely accepted cryptocurrency and the primary blockchain for DeFi applications. Its smart contract functionality allows for complex applications, making it popular in the DeFi sector.
USD Coin (USDC)
USD Coin is a stablecoin pegged to the US dollar, offering less volatility than most other cryptocurrencies. It's a reliable choice for collateral, especially for those who want to avoid significant price fluctuations.
Collateral Currencies on Filecoin Virtual Machine (FVM)
With the launch of the Filecoin Virtual Machine (FVM), Secured Finance now supports different collateral assets unique to this network:
Filecoin (FIL)
iFIL (Filecoin Liquid Staking Token)
Filecoin (FIL)
Filecoin is the native cryptocurrency of the Filecoin network, a decentralized storage system aiming to "store humanity's most important information." FIL is used to pay for storage services and incentivize network participants. It can now be used as collateral on Secured Finance within the FVM network.
iFIL (Filecoin Liquid Staking Token)
What is iFIL?
iFIL is a liquid staking token for Filecoin. It represents staked FIL tokens and provides liquidity to users who stake their FIL. By staking FIL through the GLIF platform, users receive iFIL tokens, which can be used as collateral on Secured Finance within the FVM network.
How to Obtain iFIL
To acquire iFIL tokens, follow these steps:
Stake FIL on GLIF: Visit the GLIF Staking Platform and stake your FIL tokens.
Receive iFIL: After staking, you will receive an equivalent amount of iFIL tokens.
Use iFIL as Collateral: Deposit your iFIL tokens into your Secured Finance portfolio on the FVM network to use them as collateral.
Future Plans: Expanding Collateral Options
While WBTC, ETH, USDC, FIL, and iFIL are our current collateral options across various networks, we recognize the benefits of diversifying the types of collateral we accept. We are actively considering the inclusion of additional assets to offer more flexibility and attract a wider range of users, thereby increasing our platform's overall liquidity.
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