Collateral Revaluation

Definition ∞ Collateral Revaluation refers to the periodic assessment and adjustment of the market value of assets held as collateral in lending protocols or other financial arrangements. This process ensures that the collateral accurately reflects its current market price, which is critical for maintaining appropriate loan-to-value ratios. Revaluation is necessary to protect lenders from market downturns that could diminish the value of secured assets. Consistent and accurate revaluation is vital for the health of decentralized lending platforms.
Context ∞ In crypto news, collateral revaluation is frequently discussed in relation to decentralized finance lending platforms, especially during volatile market conditions. The central debate often concerns the reliability and decentralization of the price oracles used for these valuations. Future developments are expected to involve more robust and censorship-resistant oracle solutions to improve valuation accuracy and security.