Borrowing

Why Borrow?

Borrowing appeals to users who want to leverage their current assets' potential appreciation while simultaneously seeking additional capital to invest elsewhere. This approach allows them to obtain liquidity without selling their existing assets.

For instance, let's consider a user named Alex. Alex anticipates an increase in the value of his $BNB tokens and needs extra liquidity to invest in a new opportunity but doesn’t want to sell his BNB tokens. In this scenario, Alex can:

  1. Deposit his BNB tokens into the OneStop protocol as collateral.

  2. Borrow USDT using his BNB as collateral.

  3. Utilize the borrowed USDT to invest in his desired position.

Enabling Borrowing

To borrow, users need to:

  1. Ensure their deposited asset is set as collateral. This is done in the 'Supply' section by enabling the "Use as Collateral" option.

  2. The maximum borrowing amount depends on the deposited value and available liquidity. Borrowing is restricted if there's insufficient liquidity or if the user's Health factor doesn't permit it.

Borrowing Process

  1. Navigate to 'Borrow' under the 'Markets' tab.

  2. Select the desired asset from the drop-down menu in the Borrow dashboard.

  3. Enter the amount to borrow and click 'Borrow'.

  4. Once the transaction is confirmed, the borrowed amount starts accruing interest.

Collateral Factor

The Collateral Factor varies for each asset and denotes the maximum amount that can be borrowed against a specific asset as collateral.

Repayments

Users can repay their loans through the 'Repay' option in the Borrow dashboard. Repayments must be made with the same asset that was borrowed.

Loan Repayment Period

There's no fixed timeline for repaying loans. Users can maintain their borrowing as long as their Health factor is above 1. However, accumulating interest can reduce the Health factor, increasing the risk of asset liquidation.

Avoiding Liquidation

To prevent liquidation due to a decreasing Health factor, users can either repay part of their loan or deposit additional assets to improve their Health factor.

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