> For the complete documentation index, see [llms.txt](https://docs.securd.org/documentation/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.securd.org/documentation/how-does-it-work/indirect-liquidity-providing.md).

# Indirect Liquidity Providing

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Crypto holders looking to generate simple passive income can deposit crypto assets in their **Securd Savings Account** and become Indirect Liquidity Providers.
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These deposits, grouped by asset in **Lending Pools**, are used to grant loans to Liquidity Providers. The loan interest paid by Liquidity Providers (Borrowers) generates revenues in the Depositors' Savings Balance.

Like most lending protocols, **Securd** protects deposits from repayment defaults by requiring Borrowers to lock assets in the Collateral Pool. The key difference is that **Securd** uses a very efficient collateral: LP Tokens. These LP Tokens represent the Borrower share of a DEX liquidity pool and can be redeem for a certain quantity of the original tokens.

**In order to cover for repayment at any point in time, the ratio between the collateral value and the related loans value, called Collateral Factor or CF, should be maintained above a certain value,** called **Liquidation Threshold** or LT (defined by the Collateral Model and always above 100%).

If the Collateral Factor reaches the Liquidation Threshold, **Securd** will seize the Borrower's collateral and sell it to a Liquidator. The sale proceeds will be used to pay back the related loans. This liquidation mechanism offers a strong capital protection to Depositors.

<figure><img src="https://428510884-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FNJYlBeZ3Kgi1r5M3vkP2%2Fuploads%2FaEiNY5MSyiCde2M7Wvzl%2FSecurd%20Liquidation.png?alt=media&amp;token=56fd8a02-6ca7-4dc3-a0e5-8dbbe05ff55b" alt=""><figcaption></figcaption></figure>