Lending protocols have inherent risks associated with the price volatility of assets typically used on such platforms. In order to mitigate these risks, the amount of debt a borrower is allowed to take on is less than the value of the deposit supplied to the protocol, a concept known as over collateralization. An asset deposited onto the platform will have a Collateral factor (CF), which designates the amount of the asset’s value that can be used to collateralize borrowing. Stablecoins, which have little price volatility, generally have high collateral factors and are thus commonly used for borrowing. Volatile assets, on the other hand, may have lower collateral factors to mitigate volatility and reduce the chance that a borrower’s account becomes under-collateralized. Each asset of a protocol is assigned its own parameters based on its individual risk profile and the objectives of those who govern the protocol and seek to ensure its solvency through minimal reliance on liquidations.