# 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="../modules/native-swap-engine" %}
[native-swap-engine](https://docs.native.org/native-dev/modules/native-swap-engine)
{% endcontent-ref %}

Learn more about PMM collateral and credits:

{% content-ref url="credit-based-swap/collateral-factor" %}
[collateral-factor](https://docs.native.org/native-dev/concepts/credit-based-swap/collateral-factor)
{% endcontent-ref %}

{% content-ref url="credit-based-swap/pmm-credit" %}
[pmm-credit](https://docs.native.org/native-dev/concepts/credit-based-swap/pmm-credit)
{% endcontent-ref %}