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  • Understanding the Collateralization Ratio in AlphBanX
  • Definition and Importance
  • Minimum requirement
  • What Happens If CR Drops?
  • Tools to Help You

Collateralization ratio

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Last updated 2 days ago

Understanding the Collateralization Ratio in AlphBanX

In the AlphBanX platform, the collateralization ratio (CR) is a critical metric that ensures the stability and security of loans.

Definition and Importance

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.

Minimum requirement

AlphBanX mandates a minimum CR of 150%. This means your collateral must be worth at least 1.5× the amount of ABD you borrow. If your CR drops below 150%, your vault is flagged for liquidation.

Collateral Ratio Formula

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%

What Happens If CR Drops?

  • If your CR falls below 150%, 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

Tools to Help 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

Factors That Influence CR

  • ALPH price volatility (down = CR drops)

  • Borrowing more ABD without increasing collateral

  • Partial loan repayment (improves CR)

  • Additional ALPH deposits (also improves CR)

⚡ Tip: Keeping your CR above 200% is a recommended best practice. It gives you a cushion against market swings and helps protect your vault from liquidation.