# Collateral

To open a borrowing position, users must **first supply one of the available collateral assets**. The value of the collateral determines how much they can borrow from the protocol. Since Swaylend operates as an overcollateralized protocol, users should be aware that their debt cannot match the full value of the collateral on a 1:1 basis. 

Each available collateral asset has its own **Supply Cap**, which helps manage the protocol's risk. If an asset's Supply Cap reaches 100% on the Dashboard, users will not be able to deposit that asset and will need to choose one with remaining capacity.

Each collateral asset increases a user's borrowing capacity based on its **Borrowing Factor**, which represents the percentage of the collateral's value that can be borrowed. For example, if the Borrowing Factor for ETH is 90%, a user can borrow up to 90% of the USD value of their supplied ETH in the base asset.

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