Why Can’t 100 TOKEN Borrow Its Full Value?
Put collateral value, LTV, and pool liquidity on one ledger and find a safe borrowing boundary.
- Separate collateral value, borrowing capacity, and pool liquidity
- Explain why a protocol does not lend 100% of market value
- Use LTV to calculate remaining safe room
- PREVIOUSCourse introduction
- CURRENTWhy Can’t 100 TOKEN Borrow Its Full Value?
Put collateral value, LTV, and pool liquidity on one ledger and find a safe borrowing boundary.
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Think about these questions first.
Choose an answer before opening the explanation. You can add anything unexpected to your review list.
Q01How can an overcollateralized loan still create bad debt?＋
Overcollateralization is a buffer at one moment. Price gaps, thin liquidity, oracle delay, or liquidation congestion can push collateral below debt before it is sold.
A lending protocol does not turn “value” into cash from nowhere. It accepts collateral that can be verified and liquidated, then lends below 100% of its value. The discount leaves room for volatility, execution cost, and liquidation time.
Three different numbers in one loan
Suppose you deposit 100 TOKEN and the oracle reports 120 credits per TOKEN. The book value is 12,000 credits, but that is not your borrowing capacity:
- Collateral value: value estimated from the current oracle price.
- LTV: the maximum share of collateral value that can become debt.
- Protocol liquidity: credits the pool can actually lend right now.
This lab uses a 75% maximum LTV, so the safe capacity is at most 9,000 credits. It is neither TOKEN’s “true price” nor a promise that you can repay later.
TOKEN collateral → credits
Put one loan into the state machine and watch price, interest, oracle, and keeper actions reshape the account.
Deposit collateral gradually and confirm that borrowing capacity is not the collateral value itself.
- Wallet TOKEN
- 100
- Account cash
- 5,000
- Protocol liquidity
- 100,000
- Liquidator TOKEN
- 0
Collateral is locked once deposited; a withdrawal first simulates the resulting health factor.
Move the outside market, then choose when the oracle updates. Current gap 0.00%.
Line 1.00; bonus 5.00%. The button unlocks only after health crosses the boundary.
Deposit collateral, then borrow near the capacity. Capacity, health, and pool liquidity are three different boundaries.
- 01
抵押池创建：100 TOKEN, 初始价格 120 credits.
Use the slider to return to an earlier step. Continuing from there replaces the later history with a new sequence.
Capacity is also limited by pool balance
Even with enough collateral, the lending pool may not have enough credits. A responsible interface shows both “your capacity” and “pool liquidity”; otherwise users can mistake a risk boundary for a withdrawable balance.
Expand: how this step works
collateralValue = deposited * oraclePrice
borrowCapacity = collateralValue * maxLTV
available = min(borrowCapacity - debt, poolLiquidity)
borrow(amount):
require amount <= available
debt += amount
poolLiquidity -= amount
userCash += amount
Borrowing creates a liability between the account and protocol. It does not change the collateral’s market price or remove risk.