Search result of DEBT

Collateral in cryptocurrency markets refers to assets pledged to secure debt obligations, where users lock crypto assets (typically 125%-200% of the loan value) to mitigate lending risk and establish trustless mechanisms. These assets are managed through smart contracts that automatically trigger liquidation processes, transferring the collateral to lenders when borrowers fail to meet repayment obligations, thus eliminating the need for intermediaries in managing loan securities.

Fiat currency is a government-issued money declared as legal tender, deriving its value from the issuing government's creditworthiness rather than being backed by physical commodities like gold. As the predominant form of money in the modern global financial system, fiat currencies are managed by central banks or monetary authorities and carry the force of law for circulation and debt settlement.

An IOU (I Owe You) is a digital debt instrument on blockchain that represents a tokenized promise to repay a debt. These blockchain-based debt certificates enable creditor-debtor relationships to function without traditional financial intermediaries, operating through smart contracts in the DeFi (Decentralized Finance) ecosystem. IOUs provide alternative liquidity mechanisms for cryptocurrency holders through automated execution and settlement of debt obligations.