# Credit-Based Swap

Credit-based Swap is a unique design from **Native Swap Engine** that provides the opportunity for private market makers (PMMs) to execute swaps using the **Native Credit Pool** as their inventory. In this process, PMMs are required to lock on-chain collateral to gain credits.

This approach enables higher capital efficiency for PMMs while offering liquidity providers a much simpler way to perform liquidity provisioning.

Check out this example for how the credit-based swap works:

{% content-ref url="/pages/kW0bmzxXy0w3UcZiNixq" %}
[Native Swap Engine](/native-dev/modules/native-swap-engine.md)
{% endcontent-ref %}

Learn more about PMM collateral and credits:

{% content-ref url="/pages/njJjDp5JPWfqf6KK2ny7" %}
[Collateral Factor](/native-dev/concepts/credit-based-swap/collateral-factor.md)
{% endcontent-ref %}

{% content-ref url="/pages/FV3qYa1vnbvsPIa2BuGR" %}
[PMM Credit](/native-dev/concepts/credit-based-swap/pmm-credit.md)
{% endcontent-ref %}


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