The central risk: prices sleep, markets don’t
Between Friday’s close and Monday’s open, a stock’s on-chain price stands still while the real world moves. Earnings, news, macro — a stock can gap far beyond anything intraday. During that window, borrowing continues against the held price and liquidations can’t react to information that doesn’t exist on-chain yet. The buffer is the LLTV. Crypto money markets run 80%+ loan-to-value because their prices never sleep. Denar runs 62.5% on single stocks and 77% on diversified ETFs — the gap to 100% is sized to absorb a violent weekend move before a position goes underwater. This is a deliberate, permanent design choice.The risk ladder, mechanism by mechanism
On-chain-native collateral: a different ladder
The risks above are the risks of equity collateral. On-chain-native markets swap almost all of them for a different set.
There is no weekend gap, no issuer risk and no corporate-action risk in these markets — those three simply do not exist for a token with no issuer and no closing bell.
What cannot happen, by construction
User funds cannot be trapped forever. Repaying debt and recovering collateral works in every protocol state — including a permanently dead oracle. There is no pause button on repayment.
One market cannot poison another. Markets share no accounting. NVDA’s worst day is invisible to the AAPL market’s books.
No fee can touch principal. Fees apply to interest only, under hard-coded caps (25% core, 50% vault).
Risk can’t be raised silently. Cap increases and other risk-raising admin actions pass through a public 1-day timelock. De-risking is instant.