Borrowing

How much would I pay in interest?

The interest rate incurred for borrowing assets is influenced by the borrowing rate, which is a function of the asset's supply and demand dynamics. Additionally, the interest rate on a variable rate loan fluctuates continually, while a stable interest rate offers consistent interest charges. Your current borrowing rate can be viewed at any moment in the "Borrowings" section of your dashboard.

What is Health Factor?

The health factor represents a numerical indicator of the security of your deposited assets relative to the borrowed assets and their intrinsic value. A higher health factor indicates greater safety of your funds from potential liquidation. Should the health factor fall to 1, it triggers the liquidation of your deposits. A health factor below 1 is susceptible to liquidation. For instance, with a health factor of 2, the ratio of collateral value to borrowed amount can decrease by 50%. This health factor is contingent upon the liquidation threshold of your collateral in relation to the value of your borrowed funds.

What happens when my health factor is reduced?

The health factor varies in response to changes in the value of your deposits. An increase in your health factor enhances your borrowing position by reducing the likelihood of reaching the liquidation threshold. Conversely, if the value of your collateralized assets relative to the borrowed assets declines, the health factor diminishes as well, thereby elevating the risk of liquidation.

When do I need to pay back the loan?

There is no predetermined duration for loan repayment. You may maintain the loan for an indefinite period as long as your position remains secure. However, over time, the accumulation of interest will lead to a decrease in your health factor, potentially increasing the likelihood of liquidation of your deposited assets.

How do I avoid liquidation?

In order to avoid the reduction of your health factor leading to liquidation, you can repay the loan or deposit more assets in order to increase your health factor. Out of these two available options, repaying the loan would increase your health factor more.