> For the complete documentation index, see [llms.txt](https://docs.swaylend.com/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.swaylend.com/protocol-reserves.md).

# Protocol Reserves

Reserves consist of the balance of the base or collateral asset held within the protocol, serving as a safeguard against bad debt for users. These reserves can also be withdrawn to support the development of the Swaylend protocol.

Reserves are built through two main mechanisms:

* The **difference between the interest** paid by borrowers and the interest earned by suppliers of the base asset contributes to the protocol's reserves
* The **liquidation process** can both utilize and enhance reserves, aligning with the target reserve level established by the Swaylend team.