diff --git a/CHANGELOG.md b/CHANGELOG.md
index aac3bdbccb..b7e77127a1 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -113,6 +113,7 @@ Ref: https://keepachangelog.com/en/1.0.0/
 - [1018](https://github.com/umee-network/umee/pull/1018) Return nil if negative time elapsed from the last block happens.
 - [1156](https://github.com/umee-network/umee/pull/1156) Propagate context correctly.
 - [1288](https://github.com/umee-network/umee/pull/1288) Safeguards LastInterestTime against time reversals and unintended interest from hard forks.
+- [1357](https://github.com/umee-network/umee/pull/1357) Interptex x/0 collateral liquidity as 100%
 
 ## [v2.0.2](https://github.com/umee-network/umee/releases/tag/v2.0.2) - 2022-05-13
 
diff --git a/x/leverage/keeper/collateral.go b/x/leverage/keeper/collateral.go
index 784e802efc..c93527df81 100644
--- a/x/leverage/keeper/collateral.go
+++ b/x/leverage/keeper/collateral.go
@@ -144,9 +144,12 @@ func (k Keeper) CollateralLiquidity(ctx sdk.Context, denom string) sdk.Dec {
 	exchangeRate := k.DeriveExchangeRate(ctx, denom)
 	liquidity := k.AvailableLiquidity(ctx, denom)
 
-	// Zero collateral will be interpreted as having no liquidity
+	// Zero collateral will be interpreted as full collateral liquidity. This encompasses two cases:
+	// - liquidity / collateral = 0/0: Empty market, system is considered healthy by default
+	// - liquidity / collateral = x/0: No collateral but nonzero liquidity, also considered healthy
+	// In both cases, "all collateral is liquid" is technically true, given that there is no collateral.
 	if totalCollateral.IsZero() {
-		return sdk.ZeroDec()
+		return sdk.OneDec()
 	}
 
 	collateralLiquidity := toDec(liquidity).Quo(exchangeRate.MulInt(totalCollateral.Amount))