# Diversification Model {% hint style="info" %} In addition to its Collateral Model, **Securd** offers additional capital protection through collateral diversification. {% endhint %} Let's examine the situation where all loans granted by our Token A Lending Pool are backed by a single LP Token A/B. If a specific event causes a drop in the LP Token's value such that the collateral value is only 90% of the loan value when liquidation happens, the Lending Pool will suffer a 10% loss. Let's assume another situation where the Collateral Pool is equally composed of 4 different LP Tokens (A/B, A/C, A/D, A/E). A similar drop in LP Token A/B will only cause a 2.5% loss. While collateralization reduces the probability of loss, diversification drastically reduces the size of the loss in the case it happens. In this version, collateral diversification is achieved passively by mutualizing collateral for each pool. In a future version, **Securd** will incentivize collateral diversification through interest rate mechanisms. --- # Agent Instructions: Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter: ``` GET https://docs.securd.org/documentation/securd-models/diversification-model.md?ask= ``` The question should be specific, self-contained, and written in natural language. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.