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Collateral Asset Parameter Modeling
This section describes the modeling applied to arrive at the lending parameters for each collateral asset on Fringe Lending (formerly known as the Primary Lending Platform).
When assessing a new coin, the following criteria will determine its initial parameters:
- Loan-to-Value Ratio (LVR)
- Debt Limits/Maximum Borrowing Capacity (MBC)
- Liquidator Reward Percentage (LRP)
The aim of deriving suitable values for these collateral asset parameters is to balance the competing purposes of maximizing both the platform’s stability and its long-term user adoption. Deriving suitable parameters employs a systematic and logical approach with a rationale that reflects the characteristics of each collateral asset.