> For the complete documentation index, see [llms.txt](https://jigsaw.gitbook.io/jigsaw-protocol/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://jigsaw.gitbook.io/jigsaw-protocol/about-jigsaw/dynamic-collateral-the-missing-piece-in-defi.md).

# Dynamic Collateral: The Missing Piece in DeFi

<figure><img src="/files/iNnMmyuHcGHaufVehDBk" alt=""><figcaption></figcaption></figure>

## Dynamic Collateral

In traditional finance (TradFi), collateral is often treated as static due to the overhead associated with its management. Unlocking collateral usually requires repaying the associated debt, which limits flexibility.

DeFi introduced permissionless composability, enabling innovations like rehypothecation (reusing assets to boost capital efficiency). However, **collateral management has remained largely static**, locking users into siloed vaults and strategies with limited options for reallocation.

This creates three major challenges:

* **Reduced capital efficiency**: Assets are underutilized.
* **Lack of flexibility**: Users cannot adjust strategies dynamically.
* **Complex user experiences**: Navigating siloed protocols adds unnecessary friction.

<figure><img src="/files/cY4XbY7iDYuf8ZyRcH1W" alt=""><figcaption></figcaption></figure>

Jigsaw solves these problems by introducing **dynamic collateral**—a mechanism that enables unparalleled flexibility, allowing users to move assets freely across strategies and protocols without unwinding loans.


---

# Agent Instructions
This documentation is published with GitBook. GitBook is the documentation platform designed so that both humans and AI agents can read, navigate, and reason over technical content effectively. Learn more at gitbook.com.

## 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, and the optional `goal` query parameter:

```
GET https://jigsaw.gitbook.io/jigsaw-protocol/about-jigsaw/dynamic-collateral-the-missing-piece-in-defi.md?ask=<question>&goal=<endgoal>
```

`ask` is the immediate question: it should be specific, self-contained, and written in natural language.
`goal` is optional and describes the broader end goal you are ultimately trying to accomplish on behalf of the user. GitBook uses it to tailor the answer towards what is most useful for that goal.

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.