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What is the collateral?

On-chain collateral

Utilizing on-chain collateral, miners are required to deposit their Bitcoin into a multi-sig collateral pool. This mechanism serves as a safeguard to protect against potential under-delivery of agreed-upon rewards. Should a miner fail to fulfill their obligations, Block Green (BG) promptly initiates the liquidation of an appropriate portion of the miner's collateral held within the on-chain collateral vault. By taking immediate action, this process ensures that the LPs (liquidity providers) are shielded from any negative impact stemming from the miner's inability to meet their commitments.

Off-chain collateral

In the event of liquidation, as specified in the bilateral agreement, the counterparty maintains a claim on the holding company to ensure the fulfillment of its obligations. This provision serves to protect the counterparty's interests and grants them the right to either continue operating within the premises or seize assets as necessary.