Although arbitrage in collateralized lending seems to offer stable returns, ultimately risk management is the key. Many people fail because of this—when the collateral price drops, they face liquidation risk directly.

How to avoid it? The first step is to set a reasonable collateral ratio. Mainstream assets like BTCB, ETH, and BNB have relatively controllable volatility, and maintaining a collateral ratio of 60-70% is a relatively safe range. Leaving enough buffer space is really important; don't push the ratio to the limit just to borrow a little more money.

The second step is constant monitoring. Regularly check the collateral price movements and never wait until forced liquidation to react. Once risk signals are detected, either top up the collateral in time or proactively repay part of the loan. Using both approaches can truly ensure peace of mind. Prevention is better than cure when it comes to liquidation.