Multi-Collateral Vaults

Diversify Your Collateral, Maximize Your Opportunities

Secure Your Borrowing and Lending with Maven Finance Vaults

Intro to Multi-Collateral Vaults

Maven Finance offers a comprehensive solution for users seeking financial security and flexibility through our multi-collateral vaults.

With these vaults, users can open accounts backed by multiple asset types, ensuring diverse collateralization options and maximizing their opportunities within the platform.

When opening a vault on Maven Finance, users can deposit various assets such as MVRK, USDT, wBTC, and mTokens, all into the same vault.

This broad range of supported assets enables users to utilize their portfolio holdings as collateral for loans, providing them with the flexibility to leverage different asset types based on their needs and strategies.

While multiple assets can collateralize each vault, it is important to note that each vault can only borrow a single loan asset at a time. To borrow different assets, users can open separate vaults for each asset they wish to borrow.

By depositing assets into a Maven Finance vault as collateral, users create a Collateralized Debt Position (CDP) that aligns with decentralized finance principles.

Vaults should maintain a robust over-collateralization ratio of 200%, commonly referred to as a 50% Loan-to-Value (LTV) ratio.

This means that the value of the collateral must exceed the loan amount by a factor of two.

For example, if Bob deposits $3,000 worth of tzBTC into a vault and borrows $1,000 USDT, his vault will be 300% collateralized and considered a healthy and active vault. The maximum amount Bob can borrow is $1,500, providing him with additional flexibility.

Withdrawing Collateral

Users may choose to withdraw collateral from their vault at any time until the minimum collateral ratio of 200% has been reached.

However, if a vault is under-collateralized, users will not be able to withdraw from the vault.

Repayment of Loans

Users may choose to repay their loans at any time, and can repay either in full or partially. Maven Finance provides a quick mechanism to quickly fulfill and repay a loan in its entirety as well.

Under-Collateralization

To mitigate the risks associated with under-collateralization, it is recommended to maintain a healthy collateral ratio above the minimum required ratio.

Collateral Ratio Thresholds:

• Above 200%: Healthy collateral ratio, enabling users to borrow or withdraw funds.

• 200%-150% (Buffer Zone): Vaults are "at risk" but not eligible for liquidation. Borrowers cannot withdraw or borrow additional funds and are advised to increase collateral or reduce debt to restore a healthy ratio.

• Below 150%: The vault enters a high-risk zone, potentially leading to liquidation to restore the required collateral ratio.

Borrowers are encouraged to maintain a collateral ratio well above the minimum requirement to mitigate risks associated with under-collateralization.

Under-collateralization places the platform at risk of underwater loans, where the collateral no longer secures the debt adequately.

Maven Finance's multi-collateral vaults offer users enhanced financial security, flexibility, and the ability to manage their assets effectively within our decentralized finance ecosystem.