> For the complete documentation index, see [llms.txt](https://ezfi.gitbook.io/peko-protocol/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://ezfi.gitbook.io/peko-protocol/models/dynamic-collateral-factor.md).

# Dynamic Collateral Factor

Introducing Dynamic Collateral Factor (DCF), a groundbreaking calculation approach developed by Peko Protocol. Unlike traditional methods that rely solely on the liquidity of assets, DCF takes into account an additional crucial factor—the user's credit score. We believe that a borrower's creditworthiness should be considered when determining the collateral factor, as it reflects their ability to repay their debt in a timely manner. By incorporating the user's credit score, DCF encourages responsible borrowing behavior and rewards users who demonstrate prompt repayment. As a result, the collateral factor becomes a dynamic metric that adapts to the borrower's financial history, allowing for a more accurate assessment of risk. With DCF, Peko Protocol aims to provide a fair and inclusive lending environment, empowering users to unlock greater opportunities while fostering a stronger and more resilient decentralized financial ecosystem.


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