> For the complete documentation index, see [llms.txt](https://docs.granite.world/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.granite.world/protocol-mechanics/no-rehypothecation.md).

# No Rehypothecation

Core to Granite’s design is a commitment to security by not engaging in rehypothecation, a practice common in many DeFi platforms where borrowers’ collateral is lent out to generate additional yield. While rehypothecation can increase returns, it introduces significant liquidity risks for both borrowers and LPs.

By avoiding rehypothecation, Granite ensures that users’ collateral remains fully reserved and readily available at all times, providing a higher level of predictability and transparency. This approach minimizes the risks associated with lending, offering borrowers peace of mind that their assets are not exposed to unforeseen risks or complications.

Because Granite doesn’t rehypothecate collateral, it’s always available for withdrawal after loan repayment.