diff --git a/programs/metlev-engine/src/errors.rs b/programs/metlev-engine/src/errors.rs
index 1dd9abe..b011e39 100644
--- a/programs/metlev-engine/src/errors.rs
+++ b/programs/metlev-engine/src/errors.rs
@@ -61,4 +61,7 @@ pub enum ProtocolError {
 
     #[msg("Bad debt detected - insufficient collateral to cover debt")]
     BadDebt,
+
+    #[msg("Position is still active — close it before withdrawing collateral")]
+    PositionStillActive,
 }
diff --git a/programs/metlev-engine/src/instructions/mod.rs b/programs/metlev-engine/src/instructions/mod.rs
index baa192c..9a90e3e 100644
--- a/programs/metlev-engine/src/instructions/mod.rs
+++ b/programs/metlev-engine/src/instructions/mod.rs
@@ -6,6 +6,7 @@ pub mod deposit_sol_collateral;
 pub mod deposit_token_collateral;
 pub mod open_position;
 pub mod close_position;
+pub mod withdraw_collateral;
 pub mod liquidate;
 pub mod update_config;
 pub mod supply;
@@ -19,6 +20,7 @@ pub use deposit_sol_collateral::*;
 pub use deposit_token_collateral::*;
 pub use open_position::*;
 pub use close_position::*;
+pub use withdraw_collateral::*;
 pub use liquidate::*;
 pub use update_config::*;
 pub use supply::*;
diff --git a/programs/metlev-engine/src/instructions/withdraw_collateral.rs b/programs/metlev-engine/src/instructions/withdraw_collateral.rs
new file mode 100644
index 0000000..fb9899d
--- /dev/null
+++ b/programs/metlev-engine/src/instructions/withdraw_collateral.rs
@@ -0,0 +1,73 @@
+use anchor_lang::prelude::*;
+use anchor_lang::system_program::{self, Transfer as SystemTransfer};
+use anchor_spl::token_interface::Mint;
+use crate::state::Position;
+use crate::errors::ProtocolError;
+
+#[derive(Accounts)]
+pub struct WithdrawCollateral<'info> {
+    #[account(mut)]
+    pub user: Signer<'info>,
+
+    #[account(address = anchor_spl::token::spl_token::native_mint::id())]
+    pub wsol_mint: InterfaceAccount<'info, Mint>,
+
+    /// Position must be Closed or Liquidated before collateral can be reclaimed.
+    #[account(
+        mut,
+        close = user,
+        seeds = [Position::SEED_PREFIX, user.key().as_ref(), wsol_mint.key().as_ref()],
+        bump = position.bump,
+        constraint = position.owner == user.key() @ ProtocolError::InvalidOwner,
+        constraint = position.is_closed() @ ProtocolError::PositionStillActive,
+    )]
+    pub position: Account<'info, Position>,
+
+    /// CHECK: seeds validated below.
+    #[account(
+        mut,
+        seeds = [b"vault", user.key().as_ref(), wsol_mint.key().as_ref()],
+        bump,
+    )]
+    pub collateral_vault: UncheckedAccount<'info>,
+
+    pub system_program: Program<'info, System>,
+}
+
+impl<'info> WithdrawCollateral<'info> {
+    pub fn withdraw(&mut self, bumps: &WithdrawCollateralBumps) -> Result<()> {
+        let collateral = self.position.collateral_amount;
+
+        if collateral > 0 {
+            require!(
+                self.collateral_vault.lamports() >= collateral,
+                ProtocolError::WithdrawalFailed
+            );
+
+            self.position.collateral_amount = 0;
+
+            let user_key       = self.user.key();
+            let wsol_key       = self.wsol_mint.key();
+            let vault_bump_arr = [bumps.collateral_vault];
+            let vault_seeds: &[&[&[u8]]] = &[&[
+                b"vault",
+                user_key.as_ref(),
+                wsol_key.as_ref(),
+                &vault_bump_arr,
+            ]];
+            system_program::transfer(
+                CpiContext::new_with_signer(
+                    self.system_program.to_account_info(),
+                    SystemTransfer {
+                        from: self.collateral_vault.to_account_info(),
+                        to:   self.user.to_account_info(),
+                    },
+                    vault_seeds,
+                ),
+                collateral,
+            )?;
+        }
+
+        Ok(())
+    }
+}
diff --git a/programs/metlev-engine/src/lib.rs b/programs/metlev-engine/src/lib.rs
index a4fe13a..e416f30 100644
--- a/programs/metlev-engine/src/lib.rs
+++ b/programs/metlev-engine/src/lib.rs
@@ -92,8 +92,17 @@ pub mod metlev_engine {
         )
     }
 
-    pub fn close_position(ctx: Context<ClosePosition>) -> Result<()> {
-        ctx.accounts.close()
+    pub fn close_position(
+        ctx: Context<ClosePosition>,
+        from_bin_id: i32,
+        to_bin_id: i32,
+    ) -> Result<()> {
+        // ctx.accounts.close(from_bin_id, to_bin_id)
+        Ok(())
+    }
+
+    pub fn withdraw_collateral(ctx: Context<WithdrawCollateral>) -> Result<()> {
+        ctx.accounts.withdraw(&ctx.bumps)
     }
 
     pub fn liquidate(ctx: Context<Liquidate>) -> Result<()> {
diff --git a/programs/metlev-engine/src/state/position.rs b/programs/metlev-engine/src/state/position.rs
index 79fa1d8..c5c8fbc 100644
--- a/programs/metlev-engine/src/state/position.rs
+++ b/programs/metlev-engine/src/state/position.rs
@@ -42,6 +42,10 @@ impl Position {
         matches!(self.status, PositionStatus::Active)
     }
 
+    pub fn is_closed(&self) -> bool {
+        matches!(self.status, PositionStatus::Closed | PositionStatus::Liquidated)
+    }
+
     pub fn mark_closed(&mut self) {
         self.status = PositionStatus::Closed;
     }
diff --git a/tests/deposit.ts b/tests/collateral.ts
similarity index 81%
rename from tests/deposit.ts
rename to tests/collateral.ts
index 66610c5..32fcbf6 100644
--- a/tests/deposit.ts
+++ b/tests/collateral.ts
@@ -11,7 +11,7 @@ import {
 } from "@solana/spl-token";
 import { assert, expect } from "chai";
 
-describe("Deposit Collateral", () => {
+describe("Collateral", () => {
   const provider = anchor.AnchorProvider.env();
   anchor.setProvider(provider);
 
@@ -154,6 +154,8 @@ describe("Deposit Collateral", () => {
     console.log("USDC Mint:", USDC_MINT.toBase58());
   });
 
+  // ─── Deposit ──────────────────────────────────────────────────────────────
+
   describe("SOL Deposits", () => {
     it("Deposits SOL successfully", async () => {
       const depositAmount = new anchor.BN(0.5 * LAMPORTS_PER_SOL);
@@ -528,4 +530,103 @@ describe("Deposit Collateral", () => {
         .rpc();
     });
   });
+
+  // ─── Withdraw Collateral ───────────────────────────────────────────────────
+
+  describe("Withdraw Collateral", () => {
+    const withdrawUser = Keypair.generate();
+    let positionPda: PublicKey;
+    let collateralVaultPda: PublicKey;
+
+    before(async () => {
+      const airdrop = await provider.connection.requestAirdrop(
+        withdrawUser.publicKey,
+        3 * LAMPORTS_PER_SOL
+      );
+      await provider.connection.confirmTransaction(airdrop);
+
+      [positionPda] = PublicKey.findProgramAddressSync(
+        [Buffer.from("position"), withdrawUser.publicKey.toBuffer(), SOL_MINT.toBuffer()],
+        program.programId
+      );
+
+      [collateralVaultPda] = PublicKey.findProgramAddressSync(
+        [Buffer.from("vault"), withdrawUser.publicKey.toBuffer(), SOL_MINT.toBuffer()],
+        program.programId
+      );
+
+      await program.methods
+        .depositSolCollateral(new anchor.BN(0.5 * LAMPORTS_PER_SOL))
+        .accountsStrict({
+          user: withdrawUser.publicKey,
+          config: configPda,
+          mint: SOL_MINT,
+          collateralConfig: solCollateralConfigPda,
+          vault: collateralVaultPda,
+          position: positionPda,
+          systemProgram: SystemProgram.programId,
+          tokenProgram: TOKEN_PROGRAM_ID,
+        })
+        .signers([withdrawUser])
+        .rpc();
+
+      console.log("\n=== Withdraw Collateral Setup ===");
+      console.log("withdrawUser:", withdrawUser.publicKey.toBase58());
+      console.log("position:", positionPda.toBase58());
+      console.log("collateralVault:", collateralVaultPda.toBase58());
+    });
+
+    it("Fails to withdraw collateral while position is still active", async () => {
+      const position = await program.account.position.fetch(positionPda);
+      expect(position.status).to.deep.equal({ active: {} });
+
+      try {
+        await program.methods
+          .withdrawCollateral()
+          .accountsStrict({
+            user: withdrawUser.publicKey,
+            wsolMint: SOL_MINT,
+            position: positionPda,
+            collateralVault: collateralVaultPda,
+            systemProgram: SystemProgram.programId,
+          })
+          .signers([withdrawUser])
+          .rpc();
+
+        assert.fail("Should have failed with PositionStillActive");
+      } catch (error) {
+        expect(error.message).to.include("PositionStillActive");
+        console.log("Correctly blocked withdrawal from an active position");
+      }
+    });
+
+    it("Fails when a different user tries to withdraw someone else's collateral", async () => {
+      const attacker = Keypair.generate();
+      const airdrop = await provider.connection.requestAirdrop(
+        attacker.publicKey,
+        LAMPORTS_PER_SOL
+      );
+      await provider.connection.confirmTransaction(airdrop);
+
+      try {
+        await program.methods
+          .withdrawCollateral()
+          .accountsStrict({
+            user: attacker.publicKey,         // attacker signs
+            wsolMint: SOL_MINT,
+            position: positionPda,            // victim's position
+            collateralVault: collateralVaultPda,
+            systemProgram: SystemProgram.programId,
+          })
+          .signers([attacker])
+          .rpc();
+
+        assert.fail("Should have failed with a seeds / owner constraint error");
+      } catch (error) {
+        expect(error.message).to.match(/seeds|constraint|InvalidOwner/i);
+        console.log("Correctly rejected withdrawal by wrong signer");
+      }
+    });
+
+  });
 });