> For the complete documentation index, see [llms.txt](https://srwa.gitbook.io/srwa-docs/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://srwa.gitbook.io/srwa-docs/core-calculations/collateral.md).

# Collateral

Collateral is an asset that a borrower pledges as security for a loan. SRWA Lending Protocol is overcollateralized, which means that the user has to have more collateral then the loan value.

Collateralization is calculated using Loan-To-Value ratio. LTV Ratio is set by the admins on every pool and represents the assessment of lending risk for that pool.

User can deposit one asset and take out a loan in another, so the collateral is calculated like a sum of all deposits multiplied with LTV Ratio minus sum of all loans.

SUM(i) { user\_deposit\_balance\[i] \* pool\_ltv\_ratio\[i] }