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description: Providing liquidity in the SCDP
---

# Deposits

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**This documentation is a work in progress!**
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Shared deposits of the SCDP back debt accrued from [swaps](swaps), meaning they can be fully or partially locked at any given time. When the collateral is not used as backing anymore, it can be fully [withdrawn](#withdrawals).

Deposits increase the overall [collateralization](../..#overcollateralization) of the global position. Each whitelisted [Collateral Asset ](../../collateral-assets)is configured with a deposit limit. All collaterals use the same [cFactor](../../../collateral-assets#collateral-factor) configuration as the [ICDP](../icdp).

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SCDP has very limited collateral assets compared to the ICDP.
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## Depositing Collateral

Deposits work the same way as in the ICDP for the participators. Under the hood assets are transferred from depositors wallet balance and marked as principal deposits for the depositor, after which the global deposit are incremented.

## Yield

The main reason depositors would want to participate in this system is because all asset [swaps incur a fee](../swaps#fees) paid by the account performing the swap. A configurable portion of this fee is distributed instantly to the depositors within the swap transaction itself. Fees are distributed as the same asset they have deposited.

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Fees can be claimed separately, they are also claimed with any deposit or withdraw.
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Fee distribution in the deposit asset is achieved through an additional conversion step where the fee amount is converted into the configured fee asset. At the time of writing, the system only supports **one fee asset** at a time.

<figure><img src="https://lh7-us.googleusercontent.com/m2nLVBj4q1RKM3kOb01MA_7S9n02m-F6IUT_uMuD39DL3RM1nZ_0b8CojNH2X6strSKvvmjgSxjRTMG74h6Ag_v_KyiOhrItXjruxnlWYmRe8Xj4Edu71Q-prXJRn55-WrYAjnFCYVbi7fG3CglyiGk" alt="" width="563"><figcaption><p>Distribution of the swap fee</p></figcaption></figure>

### Liquidations and Yield

A conscious choice was made that fees distributed to depositors are not used as collateral which means they are not subject to liquidations and can be withdrawn regardless of the withdrawal capacity.

This has one drawback which is that compounding does not happen automatically. Accounts must re-deposit these fees themselves. Automatic compounding can be achieved by using external automation like a keeper service or custom scripts.

## Withdrawals

When an account deposits into the [SCDP](), they allow traders to utilize it. This means that when debt exists deposits can only be withdrawn up to the [MCR](../..#minimum-collateralization-ratio). Further withdrawals have to wait for more collateral deposits or debt to be repaid by swaps.

<figure><img src="https://lh7-us.googleusercontent.com/vAGcTJQ3U5mJ5_MVSRv96B2P3NOVOG5G7jFCzLIQ3zZWD3ORkhOcFfYxMIfVR2j8ixULVrSb0osMK6YvUOGrsy0bVaWT0HDR_vGd1tICoGCspct_QqrOb-uzBldlWpCyhgN8uSAz4Lw9Mvhey-3uCZ0" alt="" width="563"><figcaption><p>Depositors cannot withdraw all deposits when debt exists</p></figcaption></figure>

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