Isolated E-Mode
Overview
Section titled “Overview”Isolation Mode enables the safe addition of new or highly volatile assets to the protocol, preventing any potential risks from spreading system-wide. Assets listed in this mode can serve as collateral exclusively for borrowing a predefined set of assets—usually stablecoins—subject to a fixed debt ceiling. This approach effectively isolates risk while broadening the range of supported assets.
Why is it important
Section titled “Why is it important”When a user chooses to enable an Isolated asset as a collateral
- Only specifically permitted assets can be borrowed.
- Borrowing is capped through a conservative supply cap.
- No additional assets can be used as a collateral.
This mechanism safeguards the protocol by restricting the total debt against higher-risk assets, thereby minimizing potential systemic impact.
