Isolated E-Mode

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

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.

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