> For the complete documentation index, see [llms.txt](https://docs.ithacaprotocol.io/docs/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.ithacaprotocol.io/docs/architecture/post-match-processing/collateral-optimization-engine.md).

# Collateral Optimization Engine

The Ithaca Protocol enforces trustless counterparty risk free on-chain settlement. 

The Ithaca Collateral Optimization Engine determines collateral requirements based on a user's portfolio maximum potential loss. 

All collateral is held within an escrow-like smart contract called [FundLock.](/docs/architecture/post-match-processing/user-funds.md#the-fundlock-contract)