Selling your assets means closing your position on that particular asset. Hence, if you are long on the asset, you would not be entitled to the potential upside value gain. By borrowing you are able to obtain liquidity (working capital) without selling your assets.
Homogeneous Group – Assets that represent the same underlying risk profile, liquidity, and value
- USD - USDC, USDT, BUSD
- ETH - ETH, BETH (BSC), WETH
- BTC - WBTC, RenBTC
Heterogeneous Group – Assets that do not represent the same underlying value
- USDC ≠ ETH ≠ BTC
Before borrowing you need to deposit any asset to be used as collateral Head to the Borrow section and click on “Borrow” for the asset you want to borrow. Set the amount you need based on your available deposits that would be used as a collateral for the loan and confirm your transaction.
The maximum amount you can borrow depends on the value you have deposited and the available liquidity. For example, you can’t borrow an asset more than set LTV or if there is not enough liquidity
Borrow limit is based on your collateral value. You can increase your collateral value by depositing tokens, and then collateralizing them
You repay your loan on the same asset you borrowed. For example, if you borrow 1 ETH you will pay back 1 ETH + interest accrued.
The interest rate you pay for borrowing assets depends on the borrowing rate which is derived from the supply and demand ratio of the asset.
Your interest amount is automatically calculated, and will be added to your borrowing balance. You can repay anytime.
There is no fixed time period to pay back the loan. As long as your position is safe, you can borrow for an undefined period. However, as time passes, the accrued interest will grow making your health factor decrease, which might result in your deposited assets becoming more likely to be liquidated.
In order to pay back the loan you simply go to the Borrowings section of your dashboard and click on the repay button for the asset you borrowed and want to repay. Select the amount to pay back and confirm the transaction.
In order to avoid liquidation, you can repay the loan or deposit more assets in order to increase your liquidation threshold. Out of these two available options, repaying the loan would increase your liquidation threshold more.