# Portfolio Lending The Portfolio Lending System is an innovative mechanism that transforms the traditional isolated margin pool into a cross-margin system. This system allows for a more efficient and flexible use of collateral, including both fungible tokens and NFTs. Each type of collateral is assigned a credit line, which can be used to provide loans across all types of collateral. The system calculates a health coefficient for the entire portfolio of staked assets. As long as this coefficient remains above 1, no liquidation auction will be triggered for the staked NFTs. ### Limitations of Traditional Deposit Pool Design In the traditional isolated margin pool design, the process of staking multiple assets and managing loans can be cumbersome. For instance, if a user wants to stake 5 blue chip NFTs to borrow ALGO for purchasing other NFTs, they would need to conduct 5 separate on-chain transactions and manage 5 different loan positions. This design not only increases operational complexity but also limits flexibility in managing liquidation risks. ### Advantages of Project Galapago's Portfolio Limit Design Project Galapago's portfolio limit design addresses these issues by allowing users to deposit additional collateral (either NFTs or fungible tokens) to maintain a high health factor, thereby avoiding liquidation. Each type of collateral supported by Project Galapago is assigned a total value, which contributes to the overall health factor of the portfolio. One of the key benefits of the cross-margin model is its ability to hedge risks. If a user's NFT portfolio contains assets with negative price correlations, it can mitigate the risk of liquidation due to sudden price changes in a single asset. This concept is similar to contract account positions in traditional trading. Through cross-margin, traders can use fewer funds to trade, achieve higher leverage ratios, and potentially earn higher returns in the market. --- # 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://docs.galapago.app/portfolio-lending.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.