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How Does the Use of a Token Standard Simplify the Margin and Collateral Requirements for On-Chain Derivatives?

Standardized collateral tokens (ERC-20) simplify integration with existing DeFi protocols for margin and liquidation management.
Greeks.Live16.11.25

How Does the Use of a Token Standard Simplify the Margin and Collateral Requirements for On-Chain Derivatives?

A standardized token allows for the easy integration of collateral into existing DeFi lending and borrowing protocols. For example, using a fungible stablecoin (ERC-20) as collateral means the derivative protocol can interact seamlessly with other DeFi primitives for margin management, liquidation, and interest calculation, simplifying cross-protocol risk management.

What Are the Key Differences between ERC-721 and the Newer ERC-1155 Standard?
How Does a Token Standard like ERC-20 Differ from ERC-721?
Can a Non-Fungible Token (NFT) Be Fractionalized, and What Standard Governs This?
How Does ERC-1155 Achieve Gas Efficiency over Separate ERC-20 and ERC-721 Contracts?

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