In finance, collateral is a borrower's commitment of property to a lender as a means to secure against counterparty risk and ensure repayment of a loan.
Overcollateralization is used to define types of loan products where an asset value used as collateral on a loan exceeds the loan value. This is sometimes used by borrowers to reduce credit risk for the creditor and enhance the loan's credit rating.
See also DeFi.
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