# Adding Collateral

> Markdown export of the Gearbox Protocol documentation page for agents and retrieval systems.

Canonical page: https://docs.gearbox.finance/developers/gm-mc-collateral
Source file: content/developers/gm-mc-collateral.mdx
Section router: https://docs.gearbox.finance/developers/llms.txt
Section full export: https://docs.gearbox.finance/developers/llms-full.txt

Deposit tokens from your wallet to a credit account to increase its health factor and enable borrowing.

## Why

You need to add collateral when:

* **Opening an account** - Initial deposit to enable borrowing
* **Improving health factor** - Account approaching liquidation threshold
* **Enabling more borrowing** - Current collateral limits how much you can borrow

Adding collateral increases your account's total weighted value (TWV), which improves the health factor and allows larger debt positions.

## What

`addCollateral` transfers tokens from your wallet to the Credit Account. On execution:

1. The Credit Manager calls `transferFrom` to move tokens from caller to Credit Account
2. The token is enabled as collateral (if not already enabled)
3. Quoted tokens are NOT auto-enabled - you must set a quota separately

**Important:** Approve tokens to the **Credit Manager**, not the Credit Facade. The Credit Manager is the contract that actually executes the transfer.

## How

```typescript
import { GearboxSDK, createCreditAccountService } from '@gearbox-protocol/sdk';

const sdk = await GearboxSDK.attach({ client, marketConfigurators: [] });
const service = createCreditAccountService(sdk, 310);

// Build the multicall
const calls = [
  service.prepareAddCollateral(usdcAddress, 10_000n * 10n ** 6n),
];

// First, approve to Credit Manager (not Facade!)
const market = sdk.marketRegister.findByCreditManager(cmAddress);
await usdcContract.write.approve([
  market.creditManager.address,
  10_000n * 10n ** 6n,
]);

// Execute on existing account
await market.creditFacade.write.multicall([creditAccountAddress, calls]);

// Or open new account with collateral
await market.creditFacade.write.openCreditAccount([
  ownerAddress,
  calls,
  0n, // referralCode
]);
```

### Using Permit (No Separate Approval)

For EIP-2612 compatible tokens, you can avoid the separate approval transaction:

```typescript
import { encodeFunctionData } from 'viem';
import { iCreditFacadeV300MulticallAbi } from '@gearbox-protocol/sdk';

// Sign permit message (details depend on your wallet setup)
const { v, r, s, deadline } = await signPermit(/* ... */);

const calls = [
  {
    target: creditFacadeAddress,
    callData: encodeFunctionData({
      abi: iCreditFacadeV300MulticallAbi,
      functionName: 'addCollateralWithPermit',
      args: [tokenAddress, amount, deadline, v, r, s],
    }),
  },
];
```

## Gotchas

### Approve to Credit Manager, Not Facade

The most common mistake. The Credit Manager executes the `transferFrom`, so it needs the approval:

```typescript
// CORRECT
await token.write.approve([creditManager.address, amount]);

// WRONG - will fail
await token.write.approve([creditFacade.address, amount]);
```

### Quoted Tokens Need Quota

Adding a quoted token as collateral does NOT automatically enable it. You must also call `updateQuota`:

```typescript
const calls = [
  service.prepareAddCollateral(quotedTokenAddress, amount),
  service.prepareUpdateQuota(quotedTokenAddress, quotaAmount, minQuota),
];
```

### Direct Transfers Don't Enable

Sending tokens directly to a Credit Account (via `transfer`) does NOT enable them as collateral. You still need a multicall with `enableToken` to count them in the health factor.

### Invalid Collateral Tokens

Only tokens recognized by the Credit Manager can be used as collateral. Transferring unrecognized tokens to a Credit Account may result in them being stuck (only governance can recover).

Check if a token is valid:

```typescript
// This reverts if token is not valid collateral
const mask = await creditManager.read.getTokenMaskOrRevert([tokenAddress]);
```

## Learn More

* [Withdrawing Collateral](https://docs.gearbox.finance/developers/gm-mc-withdraw) - The reverse operation
* [Debt Management](https://docs.gearbox.finance/developers/gm-mc-debt) - Often combined with adding collateral
* [Updating Quotas](https://docs.gearbox.finance/developers/gm-mc-quotas) - Required for quoted tokens