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Collateral Factor
Assets held by the RiFi protocol are used as collateral to borrow from the protocol. Each market has a collateral factor, ranging from 0% to 90%, that represents the percentage of the underlying asset value that can be borrowed. Illiquid, small-cap assets have low collateral factors; while liquid, high-cap assets have high collateral factors.
The collateral factor is determined by the protocol based on market liquidity measurement, volatility rate of an asset so that during the liquidation period, the market for this asset will not fluctuate too greatly to affect the system. This also protects the protocol from over-collateralized loans and default risk.
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