Collateral

Collateral is a supplied asset that backs your borrows. Enabling an asset as collateral adds its value, weighted by the market's collateral factor, to your borrow limit. Collateral can be seized in a liquidation.

Supplying an asset does not enable it as collateral. Collateral is enabled and disabled per market.

Collateral status

Each supplied balance displays one of two statuses, in the Supplied column of Supply Markets and on the market details page.

Status	Description
Collateral off	The balance earns the market's supply APY. It does not contribute to the borrow limit and cannot be seized
Collateral on	The balance earns the market's supply APY and contributes to the borrow limit. It can be seized in a liquidation

LP markets pay no supply APY in either state. See LP tokens as collateral.

Enabling collateral

1. On the Markets page, hover the asset in Supply Markets and click Collateral.
2. Approve the transaction in your wallet. Only the bridge fee is paid.
3. The tracker displays XRPL payment → Axelar relay → Executed on XRPL EVM. Once complete, the row displays Collateral on and the borrow limit is updated.

The Collateral button is displayed when you have a supplied balance and the market accepts collateral (collateral factor above 0 and a valid price). A market with the Not usable as collateral badge cannot be enabled.

TIP

Collateral is enabled and disabled from the Supply Markets table. The Collateral / Exit button on the market details page is not active yet.

Disabling collateral

1. Hover the asset in Supply Markets and click Exit.
2. Approve the transaction in your wallet.

Disabling collateral does not withdraw the balance; it keeps earning interest. The action is blocked in two cases:

Message	Cause
Repay this market before exiting collateral	You have a debt in the same market
Exiting this market would create a borrow shortfall	Without this collateral, your debt would exceed your borrow limit. Repay part of the debt first

Borrow limit

The borrow limit is the maximum value you can borrow, in USD:

Borrow limit = Σ (collateral value × collateral factor)

The collateral factor is the fraction of an asset's value that can be borrowed against. It is set per market by the protocol and displayed on the market details page, Market Analytics → Risk. Volatile or less liquid assets have lower collateral factors. A change of collateral factor goes through a timelock with a minimum delay of 48 hours. Current values: Parameters and limits.

The Borrow Limit bar in the account summary shows the share of the limit used by your debt. Every action modal displays the borrow limit as it will be after the action.

Health factor

The health factor is the ratio of your borrow limit to your debt. A position with a health factor below 1 can be liquidated. See Health factor and liquidations.