# Collateralization Ratio Adjustment ⎊ Area ⎊ Resource 2

---

## What is the Adjustment of Collateralization Ratio Adjustment?

Collateralization ratio adjustment refers to the dynamic modification of the minimum collateral required to secure a loan or maintain a leveraged derivatives position. This parameter is typically adjusted by a protocol's governance or automated risk engine in response to changes in market volatility or asset correlation. A higher ratio increases the required collateral, reducing leverage and protecting the protocol from default risk.

## What is the Risk of Collateralization Ratio Adjustment?

The primary objective of adjusting collateralization ratios is to manage systemic risk within decentralized finance ecosystems. By increasing the collateral requirement for volatile assets, the protocol mitigates the risk of undercollateralization during rapid price declines. This proactive measure prevents cascading liquidations and ensures the solvency of the lending pool or derivatives platform.

## What is the Control of Collateralization Ratio Adjustment?

This adjustment mechanism provides a crucial control lever for managing leverage exposure. When market conditions become unstable, raising the collateral ratio forces users to either add more collateral or reduce their positions, thereby deleveraging the system. This automated response helps maintain the integrity of the platform and protects liquidity providers from significant losses.


---

## [Delta Adjustment](https://term.greeks.live/term/delta-adjustment/)

## [Cost to Attack Calculation](https://term.greeks.live/term/cost-to-attack-calculation/)

## [Real-Time Fee Adjustment](https://term.greeks.live/term/real-time-fee-adjustment/)

## [Real-Time Margin Adjustment](https://term.greeks.live/term/real-time-margin-adjustment/)

## [Gas Limit Adjustment](https://term.greeks.live/term/gas-limit-adjustment/)

## [Network Stress Simulation](https://term.greeks.live/term/network-stress-simulation/)

## [Real-Time Economic Policy Adjustment](https://term.greeks.live/term/real-time-economic-policy-adjustment/)

## [Margin Ratio Calculation](https://term.greeks.live/term/margin-ratio-calculation/)

## [Margin-to-Liquidation Ratio](https://term.greeks.live/term/margin-to-liquidation-ratio/)

## [Behavioral Margin Adjustment](https://term.greeks.live/term/behavioral-margin-adjustment/)

## [Collateral Ratio Calculation](https://term.greeks.live/term/collateral-ratio-calculation/)

## [Utilization Ratio](https://term.greeks.live/term/utilization-ratio/)

## [DeFi Systemic Risk](https://term.greeks.live/term/defi-systemic-risk/)

## [Credit Valuation Adjustment](https://term.greeks.live/term/credit-valuation-adjustment/)

## [Collateral Ratio Monitoring](https://term.greeks.live/term/collateral-ratio-monitoring/)

---

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---

**Original URL:** https://term.greeks.live/area/collateralization-ratio-adjustment/resource/2/