> For the complete documentation index, see [llms.txt](https://unitus.gitbook.io/unitus-v2/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://unitus.gitbook.io/unitus-v2/unitus-v1/borrow/collaterals.md).

# Collaterals

Collateral refers to assets that a user deposits or locks into a smart contract to secure their loans, acting as a guarantee to cover potential losses in case of default or liquidation. The value of the collateral must be higher than the value of the assets borrowed, ensuring that the lender and Unitus is protected from losses. If a user’s ***Adequacy Ratio*** fell below 1, his collateral can be automatically sold at a discount to repay the lender and maintain the overall health of Unitus.

Collateralization ratios and other risk parameters vary between different assets and networks. Please check the '***Risk Parameters***' for the assets of your choice.