💲Borrowing

Borrowing vs. Selling

Choosing to borrow rather than sell assets allows you to keep potential gains while obtaining working capital. This is useful for covering unexpected expenses, leveraging holdings, or making new investments.

Initiating a Borrow

Start by using assets as collateral. Go to the Borrow section, select the asset you want to borrow, decide on the amount based on your collateral, choose between stable or variable rates, and confirm. Rate switches are possible at any time.

Borrowing Limits

The limits on borrowing are based on the value of the assets supplied and the available liquidity. A low liquidity or poor health factor might limit your ability to borrow certain assets.

Loan Repayment Terms

Loans must be repaid with the borrowed asset plus interest. For loans priced in USD, consider using stablecoins like USDC or USDT.

Stable vs. Variable Interest Rates

Stable rates provide initial consistency but may adjust later, whereas variable rates change with market conditions. You can easily switch between these on your dashboard.

Switching Interest Rates

Switch between stable and variable rates through your dashboard by changing the "APR Type" setting for the relevant asset.

Interest Rates Determination

Interest rates depend on the supply-demand balance for each asset. Variable rates are more flexible, while stable rates provide more predictability.

Understanding Health Factor

The health factor is a measure of the safety of your deposits against your borrowings. Higher values mean less risk of liquidation.

Health Factor Fluctuations

Changes in the market value of assets can affect the health factor, influencing borrowing stability. Raising the health factor improves security.

Repayment Flexibility

While repayment schedules are flexible, accruing interest can lower the health factor over time, increasing the risk of liquidation.

Loan Repayment Process

Repay loans easily by accessing the Borrowings section of your dashboard, selecting the amount to repay, and confirming the transaction.

Avoiding Liquidation

Enhance your health factor to avoid liquidation either by repaying loans or depositing more assets. Repaying the loan is generally more effective.