Glossary
Collateral Meaning: What Does Collateral Mean in Crypto?
Definition
A Collateral is an asset, like cryptocurrency, that you lock up or pledge when you take out a loan from a DeFi protocol.
It is used as security for the lender in case you can't pay back the amount you borrowed. In DeFi, loans are often over-collateralized, meaning you must deposit more value (e.g., $150 in ETH) than you are borrowing (e.g., $100 in stablecoins).