Over-collateralisation
over-collateralizedOC
Backing debt with collateral worth more than the debt itself — the standard for permissionless CDP stablecoins.
Over-collateralisation absorbs collateral-price drops before liquidation kicks in. Typical ratios: DAI 150-200%, LUSD 110%, crvUSD 100-150% (LLAMMA-soft), GHO 125%. Higher OC means lower capital efficiency but a wider safety buffer.
Related terms
- CDP (collateralised debt position)A user-opened debt position backed by crypto collateral — the issuance mechanism for DAI, LUSD, GHO, crvUSD.
- LiquidationForced sale of collateral when a borrower's health factor falls below the protocol's threshold.
- LUSDLiquity's minimally-governed CDP stablecoin, ETH-collateralised, with a 110% min ratio and a stability-pool liquidation mechanism.
- DAIThe pioneering decentralised stablecoin, issued by MakerDAO via [[cdp]] vaults backed by ETH, RWA, and other collateral.