💵Fendit (Borrowing)

Why would I borrow instead of selling my assets?

Selling your assets entails giving up and closing your position on that specific asset. As a result, if you long the asset, you would not be eligible for any possible value gains on the upside. You can get working capital (liquidity) by borrowing without selling any of your assets. Users mostly borrow to cover unforeseen costs, increase the value of their assets by leveraging, or take advantage of fresh investment possibilities.

How do I borrow?

You must provide any asset that will be used as collateral before borrowing. Just click "Borrow" for the asset you wish to borrow in the Borrow section after that. Determine the amount you require depending on the supplies you have on hand that can be used as collateral for the loan. Once you've decided on a steady or variable rate, complete your transaction. Then, you are free to modify your rate as often as you choose.

How much I can borrow?

The maximum amount you may borrow is determined by the value you have supplied and the liquidity that is readily available. For instance, if there isn't enough liquidity or if your health factor prevents it, you can't borrow an asset.

What is the difference between stable and variable rate?

In the short term, stable rates function as a fixed rate, but they can be rebalanced in the long run in reaction to alterations in the market environment. The rate that is depending on supply and demand in DID is known as the variable rate. The steady rate is the greatest choice for planning how much interest you will have to pay since, as its name suggests, it will remain fairly consistent. Depending on the state of the market, the variable rate may eventually out to be the best one. With your dashboard, you may choose between the steady and variable rate whenever you want.

When could my stable rate be rebalanced?

Although it is anticipated that a stable rate rebalancing will be improbable, it will occur if the average borrow rate is less than 25% APY and the utilization rate is more than 95%.

How do I switch my interest rate type?

Simply navigate to your dashboard and select the "APR Type" switch button for the asset you desire to apply the rate change to. This will change your interest rate from stable to variable.

How much would I pay in interest?

The borrowing rate, which is determined from the asset's supply and demand ratio, determines the interest rate you pay when borrowing assets. Moreover, a variable interest rate varies often, but a stable interest rate keeps interest rates consistent. Under the Borrowings part of your dashboard, you can always discover the rate at which you are now borrowing money.

What is the health factor?

The health factor is a numerical indicator of how safe your depository assets are compared to your borrowings and their underlying worth. The higher the value is, the safer the state of your funds are against a liquidation scenario. If the health factor reaches 1, the liquidation of your deposits will be triggered. A Health Factor below 1 can get liquidated. For a HF=2, the collateral value vs borrow can reduce by 1 out of 2: 50%. The liquidation threshold of your collateral in relation to the value of your borrowed funds determines the health factor.

What happens when my health factor is reduced?

Depending on the value fluctuation of your supplies, the health factor will increase or decrease. Your borrow position will be improved if your health factor rises since it will make it less likely that the liquidation threshold will be met. The risk of liquidation rises if the value of the assets you have pledged as collateral against the borrowed assets falls instead, as this also lowers the health factor.

When do I need to pay back the loan?

The loan repayment duration is not predetermined. You can borrow money for an ambiguous amount of time as long as your position is secure. But, as time goes on, the interest that has accumulated will increase, lowering your health factor and raising the possibility that your deposited assets may be liquidated.

How do I payback the loan?

Simply click the "Repay" button next to the asset you borrowed and want to return in the Borrowings area of your dashboard to complete the loan repayment. Choose the repayment amount, then complete the transaction.

How do I avoid liquidation?

You can repay the loan or deposit more assets to raise your health factor in order to prevent the decline in your health factor from forcing liquidation. Repaying the debt would boost your health factor more than the other two alternatives.

Last updated