Borrow VS Withdraw

Withdrawing your assets means closing your position on that particular asset. However, if you are in a deposit but you need liquidity, withdrawing funds is not the only option. Instead of withdrawal, you can borrow assets against your deposited assets without losing your position.
You can get a loan on any asset, even the one you have deposited. This way, you won’t use your position and will be able to use necessary assets for the chosen strategy.

How do I borrow?

  1. 1.
    To enable borrowing, you need to supply any asset to be used as collateral.
  2. 2.
    Select the asset you are interested in and click on the Borrow button.
  3. 3.
    In the Borrow tab, set the amount you’d like to borrow based on your available supplies that would be used as collateral for the loan.
  4. 4.
    Submit your transaction and wait for confirmation.

How does borrowing work?

How much can I borrow?

The maximum amount you can borrow depends on the value you have supplied and the available liquidity. In other words, you can’t borrow an asset if there is not enough liquidity or if your Health factor doesn’t allow you to.

What is the Health factor?

Health factor indicates the safety of your deposited assets against the borrowed assets and their underlying value. It directly influences the amount you can still borrow on the platform or the amount you need to deposit to avoid liquidation.
Learn more about how the Health factor is computed in the corresponding part of the Liquidation chapter.

When do I pay back the loan?

There are no particular time limits to pay back the loan. As long as your position is safe and you haven’t reached the critical Health factor, you can borrow for an undefined period. However, please keep in mind that the accrued interest will grow with time, decreasing your Health factor, which may lead to the liquidation of your deposited assets.

What if my Health factor is getting low?

Unfortunately, as your Health factor decreases, the risk of liquidation gets higher.

How can I avoid liquidation?

To avoid liquidation, you need to keep your Health factor high. For that, you should do the following:
  • repay your loans
  • deposit more assets to increase your liquidity