# CDP vaults and collateral

a collateralised debt position (CDP) vault is a smart contract that allows users to deposit collateral in exchange for fxTokens, a decentralized multicurrency stablecoin. the collateral can be any asset that is approved by handle.fi, currently only allows for ETH but will have a wider range in the future.

borrowing fxTokens against your CDP allows you to maintain the upside potential of your ETH while having liquidity in the form of a decentralised stablecoin. with the fxToken you have an ERC-20 token which can be used throughout handle.fi to trade, convert, earn or even hold as a currency hedge.

**fxTokens are backed by user deposited collateral in a vault.**

the amount of fxTokens you can borrow is limited by the amount of collateral you have deposited. handle.fi uses a liquidation ratio to determine how much collateral you need to maintain in order to avoid [liquidation](https://docs.handle.fi/the-platform/liquidations). if the value of your collateral falls below the liquidation ratio, your CDP will be liquidated and you will lose your collateral.

**users can have multiple vaults but each vault can only issue one fxToken currency** e.g. fxAUD, fxJPY, fxCNY

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the dashboard provides a summary of all your vault positions and provides an overview of all the key metrics to monitor:

* **current:** is the amount of the fxToken borrowed against the vault.
* **limit:** is the maximum which you can take out of that fxToken to keep your c-Ratio at the minimum required amount.
* **available:** how much more of the fxToken you can borrow before you reach your limit. it is calculated by: 'available' = 'limit' - 'current'
* **current CR:** what is your c-Ratio at these prices. collateral ratio or c-Ratio is a measure of the amount of collateral that is required to borrow a certain amount of money.&#x20;
* **util.:** percentage of total available debt you have taken out. it is calculated by: 'util.' = 'current'/ 'limit'.

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