Example: a borrower puts down $150 to borrow $100.
When prices fall, the collateral loses value with them. If it drops below a preset threshold, the system sells the collateral while it is still worth more than the loan, and the proceeds go toward repaying it. The whole process runs in code. No loan officer, no collections call, no exceptions for anyone.
This is where blockchain changes how we trust each other. The rules are published in advance, every transaction can be checked, and the machine does exactly what it promised wherever the market happens to be.
Every loan is backed by more than it borrows. Repaid automatically. Safeguards reduce risk. They do not remove it.
@Morpho
the OCC's GENIUS rule is final, so i could write checks for reserves, redemption, custody and licensing. then i'd open the AML / sanctions chapter and it's blank, separate rulemaking lol. a green test suite where the scariest tests don't exist yet..