Collateralization ratio, in crypto-backed stablecoin systems like DAI, is the ratio of a user's deposited collateral market value to the amount of stablecoins borrowed. For example, depositing $150 worth of ETH to borrow 100 DAI gives a collateralization ratio of 150%. The ratio must stay above the protocol's minimum threshold (typically 110%-150% depending on risk tier); if asset price drops cause the ratio to fall below the liquidation line, the system automatically sells collateral to repay the loan. Over-collateralization is the core safety buffer that keeps these stablecoins pegged, but also the fundamental reason for their low capital efficiency.