Introducing Stacks Market V2

In V1 ,each collateral type (sBTC, STX, etc.) had one LTV, one liquidation threshold, one liquidation penalty, and those same values applied regardless of the debt asset borrowed.

Zest V2 rethinks this model entirely by introducing Risk Groups.

Risk Group give each collateral–debt pair its own parameters: LTV, liquidation thresholds, penalties, and other settings, all tuned to how those two assets actually behave together.

In other words, each collateral to debt combination can finally be configured on its own terms, rather than forced into a single, protocol-wide template.

The benefits follow naturally:

• Far better capital efficiency and higher borrow caps Stable to stable or tightly correlated assets can support higher LTVs without increasing protocol risk.

• Safer handling of volatility Volatile to volatile combinations get lower LTVs and earlier liquidation thresholds, preventing risk from spiralling.

• Parameters that match reality Simpler onboarding of new assets, as parameters can be tailored to their behaviour.

• More predictable and controlled liquidations The new liquidation slope and exponent curve reduce sudden liquidation cliffs, smooth the process for borrowers, and create a safer environment as a whole.

Additional Upgrades

1) Smoother Liquidations: liquidations now proceed in stepped reductions with varying penalties, giving users more chances to limit the damage when a position is closed. (e.g with sBTC as collateral and USDC as the borrowed asset, partial liquidations begin at a 70% LTV, while full liquidation occurs at 75%).

2) Optional non-rehypothecation: with this feature, users can keep deposits strictly segregated as collateral and ensures they are never lent out.

If you still haven't migrated liquidity from Stacks Market V1, here is a guide: Stacks Market Liquidity Migration: V1 to V2