How Does the Collateralization of a Decentralized Stablecoin Relate to Margin Requirements?

The over-collateralization ratio in a decentralized stablecoin acts similarly to a margin requirement. The required ratio (e.g.

150%) is the protocol's safety buffer. If the collateral value drops below this ratio, the position is subject to liquidation, mirroring a margin call in derivatives trading that is triggered when collateral falls below the maintenance margin.