# Introduction to MeltLabs

![](https://436309667-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FMJ7TWWxjXiHT9lPm5ik2%2Fuploads%2FbGxwInbF3jZ8Vw1YiOwT%2F1500x500.jpg?alt=media\&token=ab8fef43-0a43-484a-83f3-545af4668c83)

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If you still have any questions or issues after reading this introduction feel free to ask on our discord.
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## What is MeltLabs?

MeltLabs is a decentralised non-custodial liquidity market protocol where users can participate as lenders or borrowers.

Depositors provide liquidity to the market to earn a passive income, while borrowers are able to borrow by providing their NFTs as a collateral (overcollateralized loans).

## How do I interact with MeltLabs?

There are 4 ways to interact with the MeltLabs protocol:

1- Provide liquidity and earn passive income.

2- Use your NFTs as a collateral and borrow USDC.

3- Flag undercollateralized positions (Look at [Liquidation ](https://meltlabs.gitbook.io/meltlabs-lending-protocol/protocol/liquidation#introduction)for more information). 

4 - Liquidate flagged undercollateralized positions (discounted from the market floor price)

## Why MeltLabs?

MeltLabs allows you to get liquidity while still owning your NFTs.

There are many ways you can earn using our protocol, namely:

1- Provide liquidity to earn a certain APY.

2- Liquidate undercollateralized positions to gain a fee on the transaction.

3- Buy a Liquidated NFT at a discount and sell it for profit.

4- Access to further liquidation discounts for MeltLabs NFT holders

## Where are your funds/NFTs stored?

Your funds/NFTs are allocated in a smart contract. You can withdraw your funds/NFTs from the pool whenever you like, we have no control over your funds/NFTs.

## Is there any risk with MeltLabs?

Yes there are, but only if you are not careful.

Interacting in the right way with the protocol will allow you to gain a lot of value from MeltLabs. The biggest risk you face is liquidation of your NFTs, which can be avoided with careful monitoring of your [health factor](https://meltlabs.gitbook.io/meltlabs-lending-protocol/protocol/health-factor).