# Collateral Distribution

**Overview**

This indicator evaluates the distribution of collateral assets used to mint mkUSD, providing insights into the potential risks associated with bad debt and liquidations. These risks primarily arise from price fluctuations in the collateralized assets.

The indicator analyzes the types and proportions of assets used as collateral for borrowing mkUSD. It breaks down the collateral into its different asset classes and presents the information.

**How can I use it?**

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By understanding the distribution of collateral assets, stakeholders can assess the potential risks tied to price volatility in those assets. If a substantial portion of collateral consists of highly volatile assets, it may signal an increased risk of liquidation or bad debt. This knowledge enables better risk management and decision-making for borrowers, lenders, and platform involved parties.

Collateralization is a common practice in decentralized finance (DeFi) to secure loans and maintain trust within the system. The choice of collateral and its distribution directly impact the risk profile of borrowing arrangements. Monitoring and analyzing this distribution allows for more strategic borrowing and lending practices, contributing to the overall stability and efficiency of the Prisma protocol.


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