Isolation Mode
How isolated collateral and debt ceilings are used to manage risk in Superlend Markets.
Isolation Mode is a risk management feature used in Superlend Markets to support new or higher-risk collateral assets.
When an asset is listed in Isolation Mode, it can be supplied as collateral under stricter borrowing constraints to limit potential system-wide risk.
How Isolation Mode Works
Isolated assets have a debt ceiling, which caps the total amount that can be borrowed against that asset across the market.
When using an isolated asset as collateral, users can only borrow approved stablecoins.
Borrowing limits are enforced automatically at the smart contract level.
Isolation Mode allows Superlend to safely introduce new asset types without exposing the entire market to excessive risk.
Borrowing Restrictions
While an isolated asset is enabled as collateral:
Only configured stablecoins can be borrowed
Other volatile assets cannot be borrowed
The debt ceiling applies at the market level, not per user
Entering and Exiting Isolation Mode
Isolation Mode does not require manual activation.
You enter Isolation Mode automatically when you supply an asset that is listed as isolated collateral.
You exit Isolation Mode once the isolated asset is no longer used as collateral.
Why Isolation Mode Exists
Isolation Mode helps:
Reduce contagion risk from new or less-proven assets
Protect market liquidity and solvency
Enable gradual onboarding of real-world assets and other novel collateral types
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