# Collateral Auro Finance supports a wide range of collateral options, including Layer 1 tokens and Liquid Staking Tokens (LSTs) and Stablecoins: * APT * stAPT * amAPT * stkAPT * kAPT * USDt * USDC * sthAPT (coming soon) * thAPT (coming soon) This flexibility allows users to leverage various assets based on their investment strategies and risk preferences. By offering multiple collateral types, Auro Finance enhances accessibility and capital efficiency, ensuring users can optimize their financial strategies. **Liquid Staking Tokens (LSTs)** LSTs represent staked assets in a Proof-of-Stake (PoS) network while maintaining liquidity. Traditionally, staked assets are locked for a set period, but liquid staking enables users to:\ ✅ Stake assets & earn rewards while keeping them tradable\ ✅ Use staked tokens in DeFi applications for lending, borrowing, and yield farming\ ✅ Maintain security & decentralization in PoS networks LSTs are usually issued on a 1:1 basis with staked assets and continue earning rewards like their original counterparts, allowing users to maximize their capital efficiency. **Loan Liquidation** To ensure that USDA remains fully backed by APT collateral, Auro Finance employs an automated liquidation mechanism: * Liquidation occurs if the collateral’s value drops below the borrowed amount. * The borrowed USDA is auctioned (Dutch auction) to cover the debt. * Liquidators receive gas compensation for triggering liquidations, and anyone can participate, including the borrower. * Once the auction is complete, sold collateral is distributed to liquidators, and any remaining balance is returned to the borrower's wallet. Auro Finance ensures a secure and efficient liquidation process, protecting the stability of USDA while offering users an opportunity to participate in the system. For a deeper dive, check out our detailed liquidation model. --- # 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://auro-finance.gitbook.io/auro-finance-docs/introduction/collateral-debt-position-usda/collateral.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.