> For the complete documentation index, see [llms.txt](https://docs.zestprotocol.com/start/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.zestprotocol.com/start/borrow/introducing-stacks-market-v2.md).

# Introducing Stacks Market V2

Learn how Stacks Market V2 uses pair-specific risk groups, partial liquidations and optional non-rehypothecation.

Stacks Market V2 is Zest Protocol’s lending market on Stacks.

It introduces pair-specific risk parameters, partial liquidations and optional non-rehypothecation to give borrowers and suppliers more control over how positions are managed.

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### Pair-specific risk groups

In Stacks Market V1, each collateral asset had one loan-to-value ratio, liquidation threshold and liquidation penalty. The same parameters applied regardless of which asset was borrowed against it.

Keep the existing image here.

Stacks Market V2 replaces that model with Risk Groups.

Each collateral and debt pair can have its own:

* loan-to-value ratio;
* liquidation threshold;
* liquidation penalty;
* borrow cap;
* other market-specific parameters.

This allows risk settings to reflect how the two assets in a position behave together rather than applying one collateral-wide configuration.

### Why pair-specific parameters matter

#### Greater capital efficiency

Stable or closely correlated asset pairs may support higher LTVs and borrowing capacity than more volatile combinations.

#### Risk settings matched to each market

Volatile or less liquid combinations can use lower LTVs, earlier liquidation thresholds and tighter borrow caps.

#### More flexible asset onboarding

New assets can be assigned parameters for specific debt markets instead of inheriting one configuration across every possible borrowing pair.

### Partial liquidations

Stacks Market V2 can reduce an unhealthy position in stages rather than immediately liquidating the full amount.

The amount liquidated and the applicable penalty depend on how far the position has moved beyond its configured threshold. This gives borrowers more opportunity to retain part of their collateral while allowing liquidators to restore the position’s health.

Exact thresholds and penalties vary by Risk Group. Users should check the current market parameters before opening or managing a position.

### Optional non-rehypothecation

Suppliers can use supported deposits as collateral without allowing those assets to be borrowed by other users.

When non-rehypothecation is enabled for a position, the deposited assets remain segregated as collateral. This can reduce rehypothecation exposure, although the position remains subject to smart-contract, oracle and liquidation risk.

### Migrating from V1

Users with assets in Stacks Market V1 must migrate them before using those assets in V2.

Follow the guide for the current process: [Stacks Market Liquidity Migration: V1 to V2](/start/borrow/stacks-market-liquidity-migration-v1-to-v2.md)