Ironbank collateral caps

In Iron Bank’s IBAgreement design for DAO-to-DAO loans, a collateral cap sets a maximum amount of the agreement’s collateral token. A setting of 0 means no cap. The governor can change this parameter; borrowing capacity and liquidation exposure also depend on separate valuation factors and outstanding debt.

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Token amounts and loan valuation

The collateral cap is denominated in collateral tokens. Its USD equivalent changes with the collateral price, so the token limit alone doesn’t specify how much debt the agreement can support.

Collateral factor
The fraction of collateral value available as maximum borrowing power. Existing debt consumes that borrowing power.
Liquidation factor
The multiplier used to calculate the liquidation threshold from collateral value. Debt above that threshold can make the agreement eligible for liquidation.
Close factor
The proportion of collateral that can be liquidated at once.

IBAgreement exposes collateralUSD for factor-adjusted collateral value available for borrowing, debtUSD for outstanding debt, and liquidationThreshold for the liquidation boundary. These values are in USD scaled by 1e18 . The collateral cap remains a token amount, so it can’t be compared directly with those raw USD readings.

Governor changes and remaining restrictions

The governor administers the agreement jointly for the borrower and Iron Bank, the executor. The documented arrangement can use a 2-of-2 Gnosis multisig with one signer from each party. In that configuration, a cap change requires both signatures. The governor’s setCollateralCap function updates the cap.

The collateral factor, liquidation factor, and close factor are listed as non-updatable in this agreement design. Cap and collateral price-feed changes can affect liquidation exposure, which makes the existing debt and collateral valuation relevant to a proposed update.

Governor changes and remaining restrictions (Ironbank collateral caps)

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A zero collateral cap doesn’t grant unlimited borrowing. IBAgreement uses Iron Bank’s credit-limit mechanism, and its debt and collateral conditions remain relevant. For a paused IBAgreement with outstanding debt, the documented restrictions block borrowing and collateral withdrawal.

Agreement caps and market caps

IBAgreement’s collateral cap belongs to the DAO loan arrangement. In the Iron Bank v2 eth branch, market supply and borrow caps have separate scopes: a nonzero supplyCap limits total supplied underlying assets in a market, while a nonzero borrowCap limits total market borrowing. Neither market setting identifies an agreement’s collateral cap.

Hypothetical use of remaining collateral capacity

A protocol borrower’s hypothetical IBAgreement has these inputs: collateral cap: 1.24 WBTC; starting collateral: 1.14 WBTC; collateral price: $37,450 per WBTC; collateral factor: 64%; existing debt: $26,124; proposed borrowing: $2,614 in USD value. All inputs and subsequent readings in this example are hypothetical. Assume the agreement is unpaused, its credit allowance and available liquidity are sufficient, and all other borrowing conditions are satisfied. Prices and accrued debt stay unchanged during the comparison.

At 1.14 WBTC, collateral value is $42,693. Applying the 64% collateral factor gives $27,323.52 of borrowing power. Subtracting existing debt leaves $1,199.52 of headroom, so the proposed borrow exceeds the collateral-derived limit.

Increasing only the collateral balance to 1.24 WBTC reaches the assumed cap. Borrowing power becomes $29,720.32, leaving $3,596.32 after existing debt. The additional 0.10 WBTC creates $2,396.80 of borrowing headroom and uses the remaining room under the token cap. The proposed $2,614 borrow now fits the collateral-derived limit.

A subsequent borrow valued at $2,614 would bring expected debt to $28,738 under these assumptions. Compare that amount with the agreement’s refreshed debtUSD reading after converting it from its 1e18 -scaled USD value. An observed $28,738 would match the expected debt increase. An unchanged $26,124 would leave that increase unconfirmed; resolve the mismatch before relying on the planned borrowing.