Collateral is the amount of cryptocurrency which is pledged as a security over and above the amount engaged in the trade. This ensures the genuinity, willingness to enter into the trade and trust factor of the user participating in the trade.  Also, all collateralised listings get an advantage on other listings of that particular market, thus increasing the chances to get picked first. On Loop, you can place a collateral of 25% of the trade amount in any cryptocurrency.