Market capitalisation represents the size of the market, which is key when it comes to liquidating collateral. While the risk of assets with smaller market capitalisations is more contained, it is often more volatile as these assets are generally less mature. A higher market capitalisation, among other factors, typically signals a more developed ecosystem (i.e., more liquidity on exchanges, which enables liquidations with less of an impact on price). The market capitalisation, along with liquidity, both on exchanges and on Aave, allow for the quantification of liquidation risks. The liquidation parameters are therefore adjusted to mitigate the risk of a high price impact liquidation for assets with smaller markets (i.e., the smaller the market cap, the higher the incentives).