FiRM Collateral Guide
FiRM accepts 20+ collateral types across stablecoins, ETH derivatives, governance tokens, and yield-bearing assets. This guide helps you choose the right collateral for your borrowing needs based on risk tolerance, capital efficiency, and your specific goals.
New to borrowing? Start with Getting Started with FiRM for a step-by-step walkthrough before diving into collateral selection.
Collateral Categories
Stablecoins and Stablecoin LPs
Assets: sUSDe, sUSDS-DOLA, scrvUSD-sDOLA, sUSDe-DOLA, USR-DOLA, wstUSR-DOLA
These are USD-pegged assets or liquidity pool tokens composed of stablecoins. They offer high capital efficiency with collateral factors typically between 90-92%.
Advantages: Minimal liquidation risk due to stable value, highest borrowing capacity per dollar deposited, predictable positions even during market volatility.
Risks: Smart contract risk from underlying protocols (Ethena, Sky, Resolv, Curve), depeg risk if stablecoin loses its peg, yields and position profitability are dependant on reward token price action.
Best for: Borrowers seeking positive carry trades who want to maximize capital efficiency with calculated liquidation risk.
Stablecoin Yield Vaults
Assets: yv-sUSDe-DOLA, yv-wstUSR-DOLA, yv-sUSDS-DOLA, yv-scrvUSD-sDOLA, yv-USR-DOLA
These are built atop of Yearn Finance's autocompounding yVaults v2 that deposit stablecoins or stablecoin LPs into yield strategies. You earn vault yields while using the vault tokens as collateral. They offer the high capital efficiency with collateral factors typically between 90-92%.
Advantages: Earn yield on collateral while borrowing (potential positive carry), high capital efficiency similar to base stablecoins, vault strategies reduce volatile reward token risk.
Risks: Additional smart contract risk from Yearn vaults, slightly more complex than holding base stablecoins.
Best for: Borrowers comfortable with Yearn's vault strategies seeking positive carry trades who want to maximize capital efficiency with calculated liquidation risk.
Wrapped Ethereum and Bitcoin
Assets: wETH, wBTC, cbBTC
Wrapped Ethereum and tokenized Bitcoin on Ethereum, allowing HODLers to maintain exposure while enabling borrowing.
Advantages: Maintains full ETH or BTC price exposure while accessing liquidity, high liquidity for easy entry and exit, well-established with deep oracle support.
Risks: Price volatility can trigger liquidation, requires active position management during market drops.
Best for: ETH and/or BTC holders who want liquidity without selling, those bullish long-term, borrowers comfortable managing volatile collateral.
Governance Tokens
Assets: CVX, INV
Governance tokens like those from Convex Finance and Inverse Finance that retain voting rights when staked as collateral on FiRM.
Advantages: Retain full governance voting power while borrowing, earn staking rewards on collateral, participate in protocol governance without giving up liquidity.
Risks: Higher price volatility than blue chip volatile assets or stablecoins, liquidity can be thinner.
Best for: Active governance participants who need liquidity, protocols and DAOs wanting to borrow against treasury holdings while maintaining voting power, users who want to leverage governance positions.
Why this matters: Most lending protocols require you to forfeit voting rights when depositing governance tokens. FiRM's Personal Collateral Escrow system allows you to stake and vote with your tokens while simultaneously borrowing against them.
Liquid Staking Derivative Tokens
Assets: wstETH, cvxCRV, st-yCRV
These tokens represent staked positions in underlying assets that continue earning staking or protocol rewards while serving as collateral.
Advantages: Your collateral actively earns yields while you borrow against it, creating potential for positive carry strategies. These tokens maintain exposure to their underlying assets while adding a yield layer, making them capital-efficient collateral choices. Staking rewards may accrue automatically depending on the collateral without requiring manual claims.
Risks: Price volatility of underlying assets can trigger liquidation. Separate ecosystem health considerations and market dynamics require additional monitoring. Additional smart contract risk from staking protocols (Lido, Convex, Yearn) beyond FiRM itself.
Best for: Users who want to maintain staking positions while accessing liquidity, those seeking additional yield on collateral and are confident in the long-term value of staked assets.
Principle Tokens
Assets: None presently available
Principle tokens represent the principal component of yield-bearing assets that have been split into separate principal and yield tokens through protocols like Pendle. When you hold a PT, you're entitled to redeem the underlying asset at maturity while forgoing the yield during the holding period.
Advantages: Locked-in yield for a defined maturity date provides yield certainty as both sides of the equation (collateral yield, borrowing costs) are fixed.
Risks: Time-dependent value that increases predictably toward maturity but may fluctuate unpredictably beforehand. Liquidity can decrease as maturity approaches, requires understanding of PT mechanics and maturity dates.
Best for: Sophisticated users who understand fixed-income mechanics, borrowers comfortable with time-bound collateral that appreciates toward par, users who seek guaranteed yields while minimizing risk assumptions.
Next Steps
Ready to borrow? Follow the Getting Started with FiRM guide with your chosen collateral.
Want to optimize? Read Advanced FiRM Features for leverage strategies and position optimization.
Concerned about safety? Study FiRM Security & Safety to understand how PCE and PPO protect your position.
Worried about liquidation? Learn prevention strategies in FiRM Liquidations & Replenishments.
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