# Collateral & Reserves

### Collateral Factor

**slTokens** come with a **collateral factor** that ranges from 0% to 80%. This factor determines how much additional liquidity an account can access by minting the slToken.

Assets that are larger or more liquid typically have **higher collateral factors**. Conversely, smaller or less liquid assets tend to have **lower collateral factors**. When an asset has a collateral factor of 0%, it cannot serve as collateral and cannot be seized during a forced liquidation event. However, it can still be borrowed.

In essence, the Collateral Factor sets the maximum amount you can borrow against a specific asset. For instance, if the collateral factor for USDC is 80%, and you deposit 1000 USDC, the maximum amount you can borrow would be $800 worth of tokens (or 800 USDC in that case).

### Reserve Factor

A portion of the interest paid by borrowers is **allocated to the protocol**, and the extent of this allocation is defined by the **reserve factor**, which signifies the **percentage of interest directed to SolidLizard Lending**. 

For instance, if the reserve factor is set at 22%, it means that Solidlizard Lending obtains 22% of the interest earned on the borrowed assets. This mechanism serves to **bolster the protocol's reserves**, safeguarding it against the accumulation of potential bad debt. **A big part of the interest earned will go to the users staking $SCALES**, the protocol's governance token. Thus creating a solid and sustainable revenue model in the long run.

| Token  | Collateral Factor | Reserve Factor | Contract                                   |
| ------ | ----------------- | -------------- | ------------------------------------------ |
| WETH   | 70%               | 22%            | 0x82aF49447D8a07e3bd95BD0d56f35241523fBab1 |
| USDC.e | 80%               | 22%            | 0xFF970A61A04b1cA14834A43f5dE4533eBDDB5CC8 |
| USDT   | 80%               | 22%            | 0xFd086bC7CD5C481DCC9C85ebE478A1C0b69FCbb9 |
| wBTC   | 70%               | 22%            | 0x2f2a2543B76A4166549F7aaB2e75Bef0aefC5B0f |
| ARB    | 60%               | 22%            | 0x912CE59144191C1204E64559FE8253a0e49E6548 |
| wstETH | 70%               | 22%            | 0x5979D7b546E38E414F7E9822514be443A4800529 |
| crvUSD | 80%               | 22%            | 0x498Bf2B1e120FeD3ad3D42EA2165E9b73f99C1e5 |
| rETH   | 70%               | 22%            | 0xEC70Dcb4A1EFa46b8F2D97C310C9c4790ba5ffA8 |