# Collateral and Reserve Factor

<figure><img src="/files/C4QqhrlrMJqwydKWvzr3" alt=""><figcaption></figcaption></figure>

ReactorFusion implements the collateral and reserve mechanic implemented by Compound Finance.&#x20;

{% tabs %}
{% tab title="Collateral Factor" %}
rfTokens have a collateral factor that can range from between 0-90%, and represents the proportionate increase in liquidity (borrow limit) that an account receives by minting the rfToken.

Large or liquid assets tend to have high collateral factors; whereas smaller or more illiquid assets will tend to have lower collateral factors. If an asset has a 0% collateral factor, it cannot be used as collateral (or seized in a forced liquidation event). However, the asset can still be borrowed.

In summary, the Collateral Factor is the maximum you can borrow against a particular asset.

**Example**: if the collateral factor for USDC is 75%, the maximum amount of USDC you would be able to borrow in other assets (assuming a deposit of 1000 USDC) would be $750.
{% endtab %}

{% tab title="Reserve Factor" %}
Reserves are an accounting entry in each rfToken contract that represents a portion of historical interest which can be withdrawn or transferred through the protocol's governance. A small portion of borrower interest accrues into the protocol, determined by the reserve factor.\
\
The reserve factor is the percentage of interest paid to the ReactorFusion. If the reserve factor is 10, then that would imply a 10% rate of interest paid on the borrowed asset allocated to ReactorFusion.
{% endtab %}
{% endtabs %}

## zkSyncEra

<table><thead><tr><th width="159">Token</th><th>Collateral Factor</th><th>Reserve Factor</th></tr></thead><tbody><tr><td>ETH</td><td>80%</td><td>20%</td></tr><tr><td>WBTC</td><td>80%</td><td>20%</td></tr><tr><td>USDC</td><td>85%</td><td>15%</td></tr><tr><td>USDT</td><td>85%</td><td>15%</td></tr><tr><td>USDC (native)</td><td>85%</td><td>15%</td></tr><tr><td>ZK</td><td>60%</td><td>20%</td></tr></tbody></table>

## Telos

<table><thead><tr><th width="159">Token</th><th>Collateral Factor</th><th>Reserve Factor</th></tr></thead><tbody><tr><td>TLOS</td><td>70%</td><td>20%</td></tr><tr><td>ETH</td><td>70%</td><td>20%</td></tr><tr><td>USDC</td><td>80%</td><td>15%</td></tr><tr><td>USDT</td><td>80%</td><td>15%</td></tr></tbody></table>

{% hint style="info" %}
Collateral factors, and/or reserve factors, may be adjusted from time to time, depending on factors such as the liquidity for a particular asset.
{% endhint %}


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