Collateralization ratio
Last updated
Last updated
In the AlphBanX platform, the collateralization ratio (CR) is a critical metric that ensures the stability and security of loans.
The Collateralization Ratio is the ratio of the value of your deposited ALPH to the amount of ABD you’ve borrowed. A higher CR indicates that your loan is well-secured, lowering the risk of liquidation. Maintaining a strong CR helps safeguard your position against market volatility and ensures the overall health of the protocol.
AlphBanX mandates a minimum CR of 200%. This means your collateral must be worth at least 2× the amount of ABD you borrow. If your CR drops below 200%, your vault is flagged for liquidation.
Collateral Ratio (CR%) = (Value of Collateral / Outstanding ABD Debt) × 100
Example:
You deposit $3,000 worth of ALPH
You borrow 1,000 ABD
Your CR = (3,000 / 1,000) × 100 = 300%
If your CR falls below 200%, the vault becomes eligible for liquidation
The loan is then auctioned off using bids from Auction Pools (5%, 10%, 15%, and 20% discount tiers)
Your ALPH is sold at a discount to repay your ABD debt
Any leftover collateral is returned to you
AlphBanX provides users with visual tools and live metrics:
Live CR% tracker in your dashboard
Options to add more ALPH or repay ABD at any time
ALPH price volatility (down = CR drops)
Borrowing more ABD without increasing collateral
Partial loan repayment (improves CR)
Additional ALPH deposits (also improves CR)
AlphBanX classifies vault health into several collateralization ratio (CR) zones to help you manage risk:
• Conservative: A CR above 400% is considered very safe. Vaults in this zone are well-collateralized and unlikely to face liquidation under normal market conditions.
• Moderate: A CR between 280% and 400% is also safe, but users should keep an eye on market movements that could push their vaults into a riskier state.
• Aggressive: A CR between 230% and 280% means your vault is becoming riskier. While still above the minimum, significant price drops could move you into the danger zone.
• High Risk: A CR between 200% and 230% is very close to the liquidation threshold. Vaults in this zone are at elevated risk and should be monitored closely.
• Liquidation Zone: If your CR falls between 100% and 200%, your vault is eligible for liquidation and auction. You should act immediately to add collateral or repay debt to avoid loss.
⚡ Tip: Keeping your CR above 400% is a recommended best practice. It gives you a cushion against market swings and helps protect your vault from liquidation.
