ETH collateral refers to the use of Ether (ETH), the native cryptocurrency of the Ethereum blockchain, as a security deposit to back loans or other financial agreements. When individuals or entities want to borrow funds, they can lock up a certain amount of ETH as collateral.This collateral serves to protect the lender. If the borrower fails to repay the loan, the lender can claim the collateral to recover their losses. The value of the collateral usually needs to exceed the value of the loan to account for price fluctuations in ETH.In decentralized finance (DeFi), ETH collateral is common in various applications. For instance, users can deposit ETH into a platform to mint stablecoins or access other financial services. The system ensures that participants follow the rules by using collateral to minimize risk.Overall, ETH collateral plays a crucial role in maintaining trust and stability in financial transactions within the Ethereum ecosystem.