Collateral Factor
The share of a deposited asset's value that a protocol allows a user to borrow against it, set per asset according to its risk.
Each accepted asset is assigned a factor by protocol governance, with widely traded and less volatile assets receiving higher factors than thin or newly listed ones. The user's total borrowing capacity is the sum of each deposit's value multiplied by its factor, which is why depositing a mix of assets produces a blended limit. The factor applies at the moment of borrowing; a separate and higher liquidation threshold determines when the position may be closed by a liquidator. Governance can reduce a factor after a risk review, which lowers existing borrowers' capacity and can push a position closer to liquidation without any price change.
व्यवहार में
If an asset carries a collateral factor of one half, depositing it creates borrowing capacity equal to half its current value.
प्रचलित भ्रांति
The collateral factor is a limit at the moment of borrowing, not a permanent allowance; governance can lower it and prices can move against the position afterwards.