Minimum Collateralization Ratio (MCR):

The minimum collateralization ratio (MCR) represents the threshold ratio of debt to collateral that prevents liquidations. When the price of an asset rises, the collateralization ratio may decrease below the set MCR, triggering liquidation. For example, if a user initially deposited $2,000 USD to create an asset worth $1,000 USD (a collateralization ratio of 200%), a rise in the asset’s price above $1.50 could decrease the collateralization ratio to below 150% and result in liquidation.