Glossary
Collateral
An asset locked into a contract to back a loan or position. If the position breaches the rules, the asset can be liquidated to repay the debt.
In DeFi, collateral is over-posted by design: borrow 100 USDC against 150 USD worth of ETH. The buffer absorbs price moves between liquidation checks.
Different protocols accept different collateral with different "loan-to-value" ratios reflecting how volatile and liquid the asset is. ETH and major stablecoins get high LTVs; long-tail tokens get strict ones, or aren't accepted at all. The LTV table is the single most important governance parameter in any lending market.