Collateralization Ratio
The value of your locked collateral divided by your debt — the cushion that keeps a DeFi loan from being liquidated.
The collateralization ratio expresses how much collateral backs a loan: deposit $150 of ETH to borrow $100 of stablecoin and you’re at 150%. DeFi lending requires this ratio to stay above a protocol-set minimum (often 110–150%), because the buffer absorbs price swings before the loan becomes undercollateralized.
Cross the liquidation threshold and the position is force-closed. Experienced borrowers deliberately keep ratios well above the minimum — a loan at exactly the required ratio gets liquidated on the first downward wick. The ratio is the single number that decides whether volatility is survivable or fatal to a leveraged position.