# Adding/Removing Collaterals

### Adding Collaterals

Collaterals can be added to the WEN protocol through a proposal and voting process. If the majority of the governance token holders agree, a new collateral type can be added. Once a new collateral type is added, it can be used to secure loans and participate in other system functionalities.

#### Implementation

A new collateral is added by calling the function `deployNewInstance` on the `Factory` contract. A collateral type cannot be added more than once. Upon execution of the aforementioned function the following actions are performed:

1. A new `Account Manager` and `Sorted Accounts` are deployed
2. The collateral is allowed into the `Stability Pool`, `Borrower Operations`, `Liquidation Manager` and `mkUSD` contracts
3. Initial parameters for that collateral are set within the protocol

### Removing Collaterals

Sometimes, it may become necessary to remove a collateral from the **WEN** protocol. This process is known as `sunsetting` a collateral. Sunsetting is initiated via a governance vote and has several implications:

1. **Collateral Handoff:** When a collateral type is being sunset, collateral handoff from `Account Manager` to the stability Pool for any liquidation is disabled. Instead, only redistribution of collateral and debt among vaults for the same collateral type is allowed.
2. **Annual Fee Adjustment:** The annual fee for the sunset collateral is increased to 50% APR. This high annual fee is intended to incentivize the repayment of loans backed by the sunset collateral.
3. **Redemption Fees:** The redemption fees for the sunset collateral are removed. This makes it more attractive for users to redeem `wenUSD` against that collateral.
4. **New Loans:** The creation of new loans backed by the sunset collateral is disabled. This helps to gradually phase out the use of the sunset collateral.

### Stability Pool Implications

The [stability pool](/how-it-works/stability-pool.md) plays a critical role in maintaining the stability of the **WEN** protocol. During the sunsetting of a collateral, certain rules apply to the stability pool:

1. **Collateral Withdrawals:** Withdrawals for the sunset collateral from the stability pool are halted and all balances cleared 180 days after the initiation of the sunsetting process.
2. **Collateral Index Reuse:** After the sunset period has ended, the collateral index used to identify a collateral in the s*tability pool* can be reused.


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