> For the complete documentation index, see [llms.txt](https://docs.trade.polynomial.fi/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.trade.polynomial.fi/perp-v3-beta/perp-v3/whats-new/multi-collateral.md).

# Multi-Collateral

### How does Multi-Collateral work?

When traders deposit alternative tokens like sBTC or sETH into their margin wallet, the system converts these assets' market value into sUSD to display them as collateral. However, traders still have the ownership of the originally deposited tokens. Due to the volatile nature of these assets, the value of the margin can fluctuate accordingly.

**Closing positions and loss handling**

When a position is closed and incurs a loss, the asset used for collateral is automatically deducted, converted into sUSD, and used to cover the shortfall.

**Fee & Funding Payment Structure**

Once the product goes live on Base Mainnet, fees and negative funding will be deducted using tokens with the least to most slippage, in the following order (likely - not yet live): sUSD, sBTC, sETH, sOP, and other tokens. This means that traders will first pay fees using their sUSD margin. If they don't hold sUSD, the system will use sBTC, then sETH, and so forth. By employing this approach, traders can minimize the impact of slippage when paying fees.

{% hint style="info" %}
**Profit & Funding rate (positive)** are always paid in sUSD
{% endhint %}


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