On-chain lending markets quietly tighten risk parameters
Governance votes across three major protocols cut loan-to-value ceilings on long-tail collateral after a volatile fortnight.
Three of the largest on-chain lending protocols passed parameter changes this week reducing maximum loan-to-value ratios on thinly traded collateral assets.
The proposals cite liquidation slippage during a volatile fortnight in which several mid-cap assets moved double digits inside an hour. In each case, the on-chain liquidity available at the liquidation threshold was materially thinner than the risk models assumed.
Risk contributors framed the changes as routine calibration rather than a response to a loss event; none of the protocols reported bad debt.
The practical effect is a modest reduction in borrowing capacity for holders of smaller assets, and slightly higher utilisation on blue-chip collateral.
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