Collateral and Leverage Assets
What's the difference between Collateral Asset(CA) and Leverage Asset(LA)?
Collateral assets are the cryptocurrencies that are used to secure your loans on UX (e.g. USDC, ATOM, USDT, stATOM, and those marked as “Collateral” on the UX app).
When you borrow funds, you have to deposit collateral assets first to ensure that the loan can be fully backed. If the value of your collateral assets decreases below a certain threshold, your position will be at risk of being liquidated.
Leverage assets are the cryptocurrencies that you can only supply and borrow on UX. Leverage assets cannot be used as collateral.
The UX community uses Commonwealth to propose new assets to list. Listing an asset as a Collateral Asset or Leverage Asset is determined by the risk profile of the token.
See more about risk assessment methodology.