Skip to content

In a lending protocol, how are collateral assets protected when their value decreases or when the value of borrowed assets increases?

OverWallet is a blockchain entry with a soft-landing reward system.

You can get point rewards by completing daily activities and missions like quizzes.

The Blockchain Learning Hub has daily quizzes to enhance your blockchain knowledge.

To get started, sign up using this link mobile.over.network/en/invite/3SDAUQX99B or use “3SDAUQX99B” as the invitation code.

When you sign up using the invitation code, you’ll get a 1,000 P bonus.

To begin a quiz, open the OverWallet app, select the “Missions” tab, and select “Daily quiz”.

In this guide, you’ll learn the answer to “In a lending protocol, how are collateral assets protected when their value decreases or when the value of borrowed assets increases?” in OverWallet.

In a lending protocol, how are collateral assets protected when their value decreases or when the value of borrowed assets increases?

Question: In a lending protocol, how are collateral assets protected when their value decreases or when the value of borrowed assets increases?

Answer: Liquidation.

Further reading

What is the name of the certificate received in return for providing liquidity to the lending pool in a lending protocol?

What do I receive when I provide liquidity to the pool?

What is Lending Protocol’s lending method?