Token exposure protection

Protects limited exposure to assets in case of extreme volatility

Complementary to Asset Whitelisting, each asset has two limits:

Token-specific borrowing power

The borrowing power of a token how much a user can borrow against that collateral. A borrowing power of 10x means that for every dollar you deposit, you can borrow assets up to $10.

Different tokens can have different borrowing powers. Since DegenPrime is cross-margin, you can have an average borrowing power for your Degen Account. More information on how this is calculated can under Health of your Degen Account.

The borrowing power of a token is based on the liquidity and stability of the assets. The ability for different borrowing powers enables DegenPrime to integrate more tokens, faster and build out its offering, instead of sticking to major tokens.

Global token cap

This deposit cap limits the number of tokens that can be deposited of a specific asset. It is the maximum exposure that DegenPrime as a whole can have on that asset. This makes sure liquidation bots can liquidate assets for their market price. This cap goes for deposits and for borrowed funds.

Thus, if the token cap for USDC would be $500k, and one user would deposit $250k USDC from his wallet, and another user borrowers $250k from the lending pool, this would mean the token cap is reached. Until the total exposure of a token is decreased (in this case, USDC is withdrawn or paid back), that token can not be deposited or borrowed.