TCR vs ECR | What are Target Collateral Ratio & Effective Collateral Ratio in  Crypto?

TCR vs ECR | What are Target Collateral Ratio & Effective Collateral Ratio in Crypto?

what are tcr and ecr if you've taken a loan you've likely heard of terms like the debt to collateral ratio or dcr let's say the value of your collateral is rupees 1000. if the amount of debt you take out on this is 2000 then your dcr is two this dcr is set by the lender or by regulators in crypto it is set by the protocol tcr is the target collateral ratio when tcr is one you get collateral of one dollar for every one dollar of crypto you might when it drops to 0.75 you only need 75 cents of collateral just like with your home loan that brings us to ecr the effective collateral ratio in reality the ratio of total collateral stored as usdc to total crypto will not exactly equal the tcr because prices are dynamic if ecr is greater than tcr then there is excess collateral this usually happens when demand for the coin is high [Music].

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