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Token Collateral Management Meaning

Token collateral management refers to the processes used to monitor, adjust, and secure digital assets pledged as collateral within financial or DeFi systems. It ensures that collateral values remain sufficient to cover liabilities such as loans, synthetic assets, or derivatives positions.

Effective collateral management involves continuous valuation, risk monitoring, and margin enforcement. Protocols may require overcollateralization, dynamic collateral ratios, or liquidation thresholds to protect against rapid price movements and insolvency risk.

In decentralized environments, token collateral management is typically enforced through smart contracts, enabling automated liquidations and rebalancing.

Robust collateral frameworks are essential for maintaining trust, solvency, and systemic stability.

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Finery Markets BVI Limited (“Finery Markets”) provides software, technology infrastructure, and related Information and Communication Technology (ICT) services on a Software-as-a-Service (“SaaS”) basis. Finery Markets acts solely as a software vendor and does not operate a trading platform, does not intermediate, match, execute, clear, or settle transactions, and does not engage in any activities that would require regulatory authorisation under applicable laws.

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