# Collaterals and Reserves

{% tabs %}
{% tab title="Collateral Factor" %}
The Collateral Factor serves as the upper limit for the amount you can borrow against a particular asset. It reflects the extent to which an asset can be used as collateral within the protocol, affecting the borrowing capacity of the user.

Assets with higher liquidity or larger market capitalization typically enjoy higher collateral factors. Conversely, smaller or less liquid assets tend to have lower collateral factors. When an asset possesses a collateral factor of 0%, it cannot be utilized as collateral for securing loans or be subject to seizure during a forced liquidation event. However, it's important to note that even assets with a 0% collateral factor can still be borrowed.

**Example**: if the collateral factor for USDT is 90%, the maximum amount of FDUSD you would be able to borrow in other assets (assuming a deposit of 1000 USDT) would be $900.
{% endtab %}

{% tab title="Reserve Factor" %}
The reserve factor is the percentage of Fee paid to Lumen Money Protocol. If the reserve factor is 10, then that would imply that 10% of the interest paid on the asset is for Lumen Money.
{% endtab %}
{% endtabs %}

| TOKEN | COLLATERAL FACTOR | RESERVE FACTOR |
| ----- | ----------------- | -------------- |
| ETH   | 40%               | 20%            |
| SOL   | 65%               | 20%            |
| USDT  | 70%               | 10%            |
| USDC  | 70%               | 10%            |
| NEON  | 40%               | 20%            |


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