Borrowing

How do I borrow an asset?

To borrow an asset, you will need to enable one of your supplied assets for use as collateral to borrow against. Click on the switch in the “Collateral” column for the asset(s) you wish to use as collateral and submit the transaction.
Once the transaction is confirmed, click on the asset you wish to borrow from within the “Borrow” column. Enter the quantity of the asset you wish to borrow and submit the transaction.
You can monitor and manage your loan positions from within the dashboard.

Why borrow instead of selling?

Borrowing rather than selling provides you with the opportunity to retain exposure to your collateral asset, while also obtaining exposure to the borrowed asset.
This is ideal in the case that you need unexpected access to funds but do not wish to lose exposure to your crypto assets.

What are the limits for borrowing?

The maximum amount you can borrow from the protocol depends on the amount of collateral you have allocated for the loan.
All loans are over-collateralized, meaning that the value of your collateral must exceed the value of the loan at all times. The degree to which a loan must be over-collateralized is dependent on that individual asset’s parameters, as determined by Drops DAO's governance mechanisms.

How do I repay a loan?

Once you’re done using your borrowed funds, you will need to repay them via the protocol in the same asset that you borrowed.
To repay a loan, click on the asset you wish to repay from the “Borrow” column. Select the “Repay” tab and enable the asset for use within the protocol (if not already enabled). Enter the quantity of the asset you wish to repay and submit the transaction.
When all loans are closed, the dashboard should reflect this via the slider and value next to the “Borrowed” column header.

How much interest will I pay?

Just like the interest rate paid on deposits, the interest rate charged for borrowing an asset is variable and determined algorithmically according to current supply and demand.
This interest rate must be paid in the same asset that you have borrowed.

What is the health factor/LTV ratio?

The health factor is a figure representing the safety of your collateral against the value of the funds you have borrowed.
When your health factor is high, the value of your collateral is far above the required threshold relative to the value of the loan. When your health factor is low, the value of your collateral is approaching a dangerous level relative to the value of your loan and may risk being liquidated.
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On this page
How do I borrow an asset?
Why borrow instead of selling?
What are the limits for borrowing?
How do I repay a loan?
How much interest will I pay?
What is the health factor/LTV ratio?