Multi-Asset Collateral

Collectors and investors often hold a portfolio of various assets. Recognizing the need for flexibility and leveraging power in the DeFi space, Unlockd introduces the feature of Multi-Asset Collateral.

This unique offering allows borrowers to collateralize a bundle of up to 100 tokenized assets from different asset types for a single loan, providing a more substantial liquidity option than could be achieved with individual RWAs.

It's important to understand the parameters within which this feature operates to ensure a smooth borrowing experience.

Maximum Number of Assets

While the Multi-Asset Collateral feature allows for significant diversification, there is a recommended limit of 100 RWAs per bundled loan. This threshold is suggested to ensure transaction reliability and to avoid potential reverts due to excessive computational complexity or gas limits on the blockchain.

Although there isn't a hard cap set on the number of assets you can bundle, transactions involving more than 100 RWAs might fail due to blockchain limitations. Therefore, it is advised to keep the number of assets in a bundled loan below 100. For those who wish to bundle more than this suggested limit, it is recommended to proceed with caution and at their own risk, as this might lead to increased chances of transaction failure and potential loss of transaction fees.

In Multi-Asset collateral loans, you have the flexibility to remove tokenized assets from the collateral bundle. This can be done as long as the action keeps your loan's Health Factor (HF) above 1. Carefully assess your loan's HF before and after the removal of any asset to ensure it remains healthy and not at risk of liquidation.

Advantages of Bundling Assets

  • Diversification of Risk: By bundling multiple assets, borrowers can mitigate the risk associated with the volatility of individual assets. A diversified portfolio as collateral helps in balancing out the loan's risk profile.

  • Increased Loan Value: Collateralizing multiple assets can potentially increase the overall loan value accessible to the borrower. This is particularly beneficial for those looking to maximize their borrowing power.

  • Efficient Management: Managing one loan with multiple assets is easier and more gas-efficient than obtaining and managing multiple loans for individual assets. This streamlined approach saves time and transaction fees.

Appraisal and Loan-to-Value (LTV)

The value of each asset within the bundle is individually assessed using Unlockd's advanced appraisal providers, which take into account factors like rarity, market demand, and the asset's intrinsic characteristics. For specific information about how this works, check the Collateral Valuation section.

The LTV for the loan is then dynamically calculated based on the combined appraisal of the bundled assets, ensuring a fair and accurate representation of the bundled collateral's worth.

Repayment and Liquidation

Repayment terms for loans with multiple assets remain as flexible as they are for single-asset loans. Borrowers can repay the loan in installments or as a lump sum based on their financial convenience. In the event of a liquidation trigger, where the Health Factor falls below 1, the smart liquidation process activates, which is designed to be as minimally disruptive as possible while protecting the interests of both borrowers and lenders.

In the event of liquidation, after a substantial grace period for the borrower, automatic liquidations may need to be conducted via an External Liquidation Gateway, as detailed in our Liquidation Process.

The smart algorithm is designed to minimize the total number of assets needed to be liquidated in order to recover the Health Factor.

We strongly recommend reviewing the Liquidations section to understand how this could affect your bundled assets.

Last updated