Compound Collateralization Ratio
@scottincrypto
Compound is a defi deposit & lending protocol, built for developers. Lenders can deposit capital and earn yield on the deposit. They are able to borrow against this capital at a market rate, up to limit known as the collateralization factor. This factor is simply the ratio of the borrowed funds to the deposited capital denominated in USD. This factor is analogous to LVR in the trad-fi world.
Compound offers a number of markets for deposits & loans. The ratio between the borrowed capital and the supplied capital is the collateralization ratio of the market. When this ratio gets above 75%, deposit & borrow rates climb steeply to incentivise new liquidity into the pool and discourage new loans.
The table to the right shows this collateralization ratio the date this report was executed. The graphs below show how this ratio has changed for the entire Compound Protocol, and for each market individually over the last 90 days.
The data below shows that stablecoins are in demand for borrowing, with consistently high collateralization ratios. Other coins, particularly ETH, have lower ratios, indicating that they are typically used as collateral for loans rather than being borrowed.
Over the last 90 days, the overall Compound Protocol collateralization has remained steady. The ratios for stablecoins, particularly USDC and USDT, have dropped since the May market crash. This could point to people deleveraging in response to falling collateral values to avoid liquidation.
All Compound Markets
Dai Market
USDT Market
USDC Market
COMP Market
ZRX Market
BAT Market
wBTC Market
UNI Market
ETH Market
SAI Market