Volatile non-blue chip

The Volatile Non-Blue Chip kink model aims to handle assets that are not considered "blue chip" and are expected to be slightly more volatile in their price. This model sets an optimum collateralization ratio of 45% for these types of assets that are used as isolated pairs.

When using this model, borrowers are required to pledge 45% of the value of the loan as collateral to access the loan. This specific collateralization ratio is put in place because these assets may be considered slightly more volatile and therefore, require a higher level of security for the lender in case the value of the collateral drops.

To encourage liquidity providers to supply assets to the platform, this model adopts a low liquidation ratio below the 45% point. This means that a relatively small amount of value in collateral is required to secure a loan. But as the collateralization level increases beyond 45%, the liquidation ratio increases exponentially in order to protect the lender from excessive risk.

What sets this model apart from others is its unique approach of isolated pairs of assets for non-blue chip assets which in turn allows for more granular control over which assets are allowed to be used as collateral and loans and allows for better risk management strategies.

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