> For the complete documentation index, see [llms.txt](https://docs.notional.finance/traders/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.notional.finance/traders/risk-and-collateralization-1/collateral-requirements.md). # Collateralization Every debt, represented either by a negative fCash balance or a negative cash balance, contributes to an account's collateral requirement. An account's collateral requirement is calculated on a portfolio basis, taking all it's collective assets and debts into consideration across all supported currency types. ### Collateral Assets Notional allows users to borrow against each asset type held in the Notional system * Cash Balances * Positive fCash Balances * Liquidity Tokens Each of these assets has a different risk and liquidity profile. Notional treats each asset differently in collateral calculations and applies a haircut to the asset's value as a function of its riskiness. ### Free Collateral Free collateral is the central concept that Notional uses to evaluate an account's collateral position and validate an account's prospective transactions. Free collateral represents the amount of collateral, denominated in ETH, that an account holds beyond what it needs to meet its minimum collateral requirements. If an account’s free collateral figure is positive, the account is adequately collateralized. If the account's free collateral figure is negative, it is under-collateralized and eligible for liquidation. --- # Agent Instructions This documentation is published with GitBook. GitBook is the documentation platform designed so that both humans and AI agents can read, navigate, and reason over technical content effectively. Learn more at gitbook.com. ## Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter, and the optional `goal` query parameter: ``` GET https://docs.notional.finance/traders/risk-and-collateralization-1/collateral-requirements.md?ask=&goal= ``` `ask` is the immediate question: it should be specific, self-contained, and written in natural language. `goal` is optional and describes the broader end goal you are ultimately trying to accomplish on behalf of the user. GitBook uses it to tailor the answer towards what is most useful for that goal. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.