# 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. --- # 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://block-green.gitbook.io/block-green-litepaper-v1/the-solution/miners/what-is-the-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.