Basics
What Is Collateral?
Assets deposited to back or secure a financial position.
Definition
Collateral is what you put up so a position can be settled no matter which way it goes. In a synthetic protocol it backs the tokens you mint. In a lending market it backs what you borrow.
How it works
You deposit an asset, a smart contract holds it, and the tokens or the loan sit against it. Unwind the position and the contract releases the collateral.
In Continuum
Continuum takes stablecoins: USDC, USDT, USDv. Deposit 1,000 USDC and mint L/S worth 1,000 USDC between them. The stablecoins stay in the program until someone burns a matched pair to get them out.
Related terms
More basics terms
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