Multi-Protocol Debt

Definition ∞ Multi-protocol debt refers to financial obligations incurred by users or entities across multiple decentralized finance (DeFi) protocols. This debt often involves collateralizing assets in one protocol to borrow in another, creating complex interdependencies. Managing such debt requires careful monitoring of collateral ratios and liquidation thresholds across different platforms.
Context ∞ The existence of multi-protocol debt highlights the interconnectedness and potential systemic risks within the DeFi ecosystem. A significant price drop in a collateral asset can trigger cascading liquidations across several protocols, potentially leading to broader market instability. News reports often analyze the implications of these complex debt structures for overall DeFi health and user exposure.