> For the complete documentation index, see [llms.txt](https://docs.wildcat.finance/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.wildcat.finance/using-wildcat/day-to-day-usage/optional-collateral-contracts.md).

# Optional Collateral Contracts

Wildcat allows for a borrower to deploy one or more smart contracts holding assets that can be liquidated and transferred in to a specific Wildcat market should capital calls (withdrawal requests) not be honoured in the appropriate time frame. The intention here is to offer lenders a mechanism by which they can underwrite a credit opportunity by referring to backing assets visible on-chain.

While the 'default' behaviour of Wildcat is that markets are under/uncollateralized depending on the [reserve ratio/CRR](/using-wildcat/terminology.md#reserve-ratio) set on creation, making use of collateral contracts permits a market to be partially, fully or even *over*collateralised, in *any* ERC20 asset provided that there is a path to convert them to the underlying (base) asset of a Wildcat market.

This is distinct from the concept of a borrower 'over-repaying' assets to a market itself (i.e. transferring 1,000 USDC to a market where they only have 900 USDC in outstanding debt) - collateral contracts are defined in assets that are *different* to the asset being borrowed, such as depositing Wrapped Ether (WETH) as a pledge against a USDC credit line.

In the current version of collateral contracts, the assets pledged within a collateral contract are not deployed further to, for example, yield farm: rather, they sit 'in stasis' until the earlier of:\
\
a) the market being terminated (all outstanding debt is repaid), whereupon the borrower can withdraw the assets from the collateral contract, or\
\
b) the market enters penalised delinquency, whereupon the appropriate amount can be liquidated by an approved executor address into the underlying asset of the market and repaid.

#### Using Collateral Contracts As A Borrower

<figure><img src="/files/v5MCVwPmHROXbHSTOU9w" alt=""><figcaption></figcaption></figure>

sdfsfd

<figure><img src="/files/IHVgV41yYgT0LwzgFZQy" alt=""><figcaption></figcaption></figure>

fsfsf

<figure><img src="/files/nRaje3rruizJJbJIfHGk" alt=""><figcaption></figcaption></figure>

dasdsdf

<figure><img src="/files/UGY4SawfcawzvH4OOC6O" alt=""><figcaption></figcaption></figure>

sdfasfd

<figure><img src="/files/QjeygmlYIGzFnHReUIOH" alt=""><figcaption></figcaption></figure>

sdfsdfs

<figure><img src="/files/xkukk386sFOjVE7HJjhy" alt=""><figcaption></figcaption></figure>

dsdsfs

<figure><img src="/files/mMVcRVyLvt2cAF9Ztc2O" alt=""><figcaption></figcaption></figure>

fsdfs

<figure><img src="/files/8HEZZbOVVcUF1ssNMQpp" alt=""><figcaption></figcaption></figure>

dasfsafda

<figure><img src="/files/y1U0D8AFfJdQaXwHTvqt" alt=""><figcaption></figcaption></figure>

#### Technical Details

todo