> For the complete documentation index, see [llms.txt](https://eigenphi-1.gitbook.io/classroom/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://eigenphi-1.gitbook.io/classroom/glossary/collateral-liquidation.md).

# Collateral, Liquidation

Pledging something of value against a loan to guarantee that the person taking the loan will complete repayment. In DeFi, when you borrow token A, your asset is seen as collateral. As a result, the protocol will liquidate your assets in case the market moves against you.