Collateral Assets

Last updated 1 year ago

Collateral Assets

Overview

Collateral Assets can be deposited into the protocol to enable borrowing Kresko Assets against the value of the deposit. Each Collateral Asset has two keeping the protocol updated with the most recent market information about it.

Collateral Asset Types

The following is an example list of possible collateral assets:

Native Cryptocurrencies Existing digital assets available within the relevant blockchain ecosystem such as ETH.
Stablecoins Assets pegged to a stable fiat currency, such as USDC, DAI, or USDT.
Wrapped Cryptocurrencies Wrapped tokens representing another cryptocurrency eg. wBTC WETH.
Synthetic Assets Some Kresko Assets can also be supplied as collateral.
Liquid Staking Derivatives Popular liquid staking tokens eg. stETH, rETH

Criteria

Initially the protocol founding team has decided a list of assets to include but later on new collaterals can be added using a governance module.

Collateral Assets in the protocol can basically be any ERC-20 token with following properties

Has value.
Sufficient on-chain liquidity.
Good reputation.
Price feeds available from supported oracle networks.
Does NOT have a fee-on-transfer mechanism. This is subject to change later on.

Kresko Asset can also be whitelisted as a Collateral Asset.

Collateral Factor

Collateral Factor (CF) is a value for each collateral based on its risk profile. Generally, the higher the volatility of an asset, the higher the risk.

It is a fraction between 0 and 1 that is used to calculate the risk-adjusted valuation of deposited collateral. Given an asset a, CF can be represented as follows:

CF_a = [0,1]

Collateral Factor Example

Example

Collateral DAI has a cFactor of 1. Oracle price $1
Collateral wBTC has a cFactor of 0.8. Oracle price $15000

Bob deposits 100 DAI as collateral currently worth $100

Bob does another deposit with 0.1 wBTC currently worth $1500

Calculating the individual deposit values:

DAI = $100 * 1 = $100
wBTC = $1500 * 0.8 = $1200

Protocol will consider Bobs total collateral value as:

$1200 + $100 = $1300

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Last updated 1 year ago

Overview

Collateral Asset Types

The following is an example list of possible collateral assets:

Native Cryptocurrencies Existing digital assets available within the relevant blockchain ecosystem such as ETH.
Stablecoins Assets pegged to a stable fiat currency, such as USDC, DAI, or USDT.
Wrapped Cryptocurrencies Wrapped tokens representing another cryptocurrency eg. wBTC WETH.
Synthetic Assets Some Kresko Assets can also be supplied as collateral.
Liquid Staking Derivatives Popular liquid staking tokens eg. stETH, rETH

Criteria

Initially the protocol founding team has decided a list of assets to include but later on new collaterals can be added using a governance module.

Collateral Assets in the protocol can basically be any ERC-20 token with following properties

Has value.
Sufficient on-chain liquidity.
Good reputation.
Price feeds available from supported oracle networks.
Does NOT have a fee-on-transfer mechanism. This is subject to change later on.

Kresko Asset can also be whitelisted as a Collateral Asset.

Collateral Factor

Collateral Factor (CF) is a value for each collateral based on its risk profile. Generally, the higher the volatility of an asset, the higher the risk.

It is a fraction between 0 and 1 that is used to calculate the risk-adjusted valuation of deposited collateral. Given an asset a, CF can be represented as follows:

CF_a = [0,1]

A Collateral Factor of 1 means the protocol values the Collateral Asset in full when calculating a 's total collateral value.

Collateral Factor Example

Example

Collateral DAI has a cFactor of 1. Oracle price $1
Collateral wBTC has a cFactor of 0.8. Oracle price $15000

Bob deposits 100 DAI as collateral currently worth $100

Bob does another deposit with 0.1 wBTC currently worth $1500

Calculating the individual deposit values:

DAI = $100 * 1 = $100
wBTC = $1500 * 0.8 = $1200

Protocol will consider Bobs total collateral value as:

$1200 + $100 = $1300