An analysis of repayment and liquidation rates across tokens, examining borrower behavior, collateral health, and liquidation triggers to assess risk dynamics and market conditions in decentralized lending.

Repayment rates: The percentage of borrowed tokens or loans paid back by borrowers over time.

Liquidation rates: The percentage of token positions forcibly closed (liquidated) when borrowers fail to maintain required collateral or margin.

Why average repayment rates can be up to 4400%

Such extremely high repayment rates percentages can occur due to factors like:

Compounding interest: If interest on borrowed tokens compounds frequently, total repayments can multiply far beyond the original amount.

High leverage and fees: Borrowers using high leverage may face rapid liquidation and higher repayments to cover fees and interest.

Multiple repayment cycles: Over time, repeated borrowing and repayment cycles can inflate the average repayment rate.

Thus, a 4400% average repayment rate likely reflects compounded interest, fees, and multiple repayment periods rather than a simple one-time repayment of principal.

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