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On this page
  • How it Works
  • Key Properties of a Collateral Asset:
  1. Concepts

Collateral Asset

PreviousWhitelisted AssetsNextMargin Trading

Last updated 12 days ago

A Collateral Asset is a digital asset that an Asset Manager deposits into a Margin Account to secure a loan in the Arkis ecosystem. It serves as a financial guarantee that ensures lenders and liquidity providers are protected in case of a borrower's default or excessive risk exposure.

How it Works

  1. Deposit: The Asset Manager deposits an approved (whitelisted) token—like ETH, LSTs, Pendle PTs, or LP tokens—into a Margin Account.

  2. Risk Assessment: The value of the asset is monitored in real time by the , which calculates the and ratio.

  3. Leverage Enablement: Based on the collateral's quality and risk profile, the Asset Manager can borrow funds or open leveraged positions within approved limits.

  4. Usage: The Asset Manager can trade, yield farm, or hedge with the borrowed assets—only within whitelisted protocols—while the collateral remains locked in the Margin Account.

  5. Liquidation Safety Net: If the Risk Factor crosses a critical threshold, Arkis will liquidate part or all of the collateral automatically to repay lenders and protect the platform from losses.

Key Properties of a Collateral Asset:

  • Must be part of the

  • Subject to LTV constraints (e.g., 50% for volatile tokens, up to 80–90% for stable collateral)

  • Can be yield-bearing, such as Pendle PT tokens or Curve LPs

  • Must have sufficient onchain liquidity to allow liquidation with minimal slippage

Example:

An Asset Manager deposits $1,000 worth of EtherFi (LST) into a Margin Account. Based on the token’s risk profile, Arkis allows a max LTV of 60%. The Asset Manager can now borrow up to $600 worth of USDC and use it to open positions or farm on whitelisted DeFi protocols—all while EtherFi acts as collateral.

Arkis Margin Engine
Risk Factor
Stress-Tested Value
Whitelisted Assets