Isolation Mode
Isolation Mode
Isolation mode allows MakerDAO Governance to list new assets as isolated assets, which have a specific debt ceiling. Only certain assets can be borrowed in isolation mode—specifically, approved stablecoins. In order for an asset to become approved for borrowing, assets are voted on by MKR token holders through the Maker Governance.
The debt ceiling for an isolated asset is represented as the maximum amount in USD that can be borrowed against the user’s collateral with two decimals of precision.
How can I enter isolation mode?
Entering isolation mode is specific to certain isolated assets that are voted on and approved by Maker Governance. You cannot utilize non-isolated assets as collateral to enter isolation mode. The steps to entering isolation mode are as follows:
From the dashboard select an isolated asset to supply.
You will then see an information notification explaining that you are entering into isolation mode.
Once you have successfully entered isolation mode, you will then be able to supply an isolated asset.
You can also borrow assets once in isolation mode; however, you will only be able to borrow stablecoins up to a certain debt ceiling.
How can I exit isolation mode?
To exit isolation mode, you will need to disable the collateralized isolated asset that you have supplied.
From the “Your Supplies” section, click the slider button to disable the isolated asset.
Confirm the disabled isolation mode setting. You have now successfully exited isolation mode.
How does isolation mode affect my borrowing power?
Upon entering isolation mode, you will be limited to borrowing stablecoins. This is further evidenced under the “Assets to Borrow” section where you will see the available stablecoins listed.
Each isolated asset will have a specific debt ceiling, which means that it is only possible to borrow up to the specified debt ceiling amount. The debt ceiling is visible on the reserves page of each asset.
Last updated