Collateral

Collateral is the foundational primitive of DeFi lending. Unlike a bank, which underwrites credit, an on-chain protocol does not know who its user is. The guarantee of repayment is the locked asset whose value comfortably exceeds the debt.

What gets used as collateral

• TON — the main collateral asset for TON lending, mirroring ETH on Ethereum DeFi.
• Liquid-staking tokens (tsTON, hTON, stTON) — TON that keeps earning staking yield while pledged. Capital-efficient.
• Stablecoins (USDT) — low-volatility collateral that supports a higher LTV.
• Blue-chip jettons (NOT, DOGS — on selected protocols) — usually with conservative LTV because of volatility.

Each protocol publishes a whitelist with per-asset risk parameters (LTV, threshold, liquidation bonus).

Loan-to-Value (LTV)

The cap on how much you can borrow per unit of collateral. At LTV 70% for TON, 1000 USDT-worth of TON backs a 700 USDT borrow. The more volatile the asset, the lower the LTV — USDT may sit at 90%, a memecoin at 30% or be ineligible entirely.

Risk parameters

• Liquidation threshold — sits above LTV. If collateral/debt drifts below, liquidation can fire.
• Liquidation bonus — discount captured by liquidators, typically 5–10%.
• Borrow cap / supply cap — per-asset market limits so a single token cannot blow up the protocol.
• Isolation mode — exotic assets only collateralise one specific pair, ringfenced from the main pool.

What matters

• Collateral does not always work for free. Some designs (EVAA, for example) keep paying supply yield on collateral; others do not.
• Asset correlation. Collateral and debt highly correlated (TON for USDT) means risk depends only on TON falling. Anti-correlated pairs face risk from both sides.
• Oracle dependency. Collateral value is computed from an oracle. Oracle failure = mass liquidation risk.

Collateral is your own risk capital. Pick the size, LTV, and buffer to threshold based on your own view of volatility, not on the maximum the protocol permits.