Borrowing Assets
Borrowing assets on Udon Finance allows you to access liquidity without selling your valuable crypto holdings. This powerful feature enables you to leverage your supplied assets as collateral, providing you with capital while maintaining your long-term investment positions. Thanks to Chromia's efficient blockchain, your borrowing experience will be remarkably fast and gas-free.
1. Understanding Your Borrowing Capacity & Collateral Requirements
Before you borrow, it's crucial to understand how your collateral dictates your borrowing limit and potential risks.
Collateral is Key:
Your ability to borrow any asset on Udon Finance is directly tied to the assets you have already supplied and designated as collateral. If you have toggled off the "Collateral" status for an asset (as discussed in the Supplying Assets section), that asset will not count towards your borrowing capacity, and borrowing will likely be disabled until sufficient collateral is enabled.
Borrowing Limit (LTV) Calculation:
You can borrow any available asset up to a value determined by your Total Collateral Value multiplied by the Asset's Loan-to-Value (LTV) ratio.
Important Note on Health Factor: As you approach your maximum borrowing limit, your Health Factor will decrease, nearing 1. It's vital to monitor this metric closely, as borrowing too close to the limit significantly increases your liquidation risk. Always leave a safety buffer!
2. Identifying Assets Available for Borrow
Your dashboard provides a clear overview of the assets you can borrow based on your current collateral.
Explore the "Assets to Borrow" Table: Navigate to the "Assets to Borrow" section on your dashboard. This table will display critical information for each borrowable asset:
Asset: The cryptocurrency available to borrow (e.g., CHR, USDT).
Available: This indicates the maximum amount of that specific asset you can currently borrow, considering your collateral and the asset's LTV. This value reflects your personal borrowing capacity.
Max Available in Pool: This shows the total amount of that asset currently available in the liquidity pool. Even if your personal Available limit is high, you can only borrow up to what's actually in the pool.
Borrow APY: The Annual Percentage Yield (interest rate) you would pay for borrowing this asset.
LTV: The Loan-to-Value ratio for this specific asset.
Actions: This column contains the "Borrow" and "Details" buttons.
3. Accessing the Borrow Pop-up
Once you've decided which asset to borrow, initiate the transaction.
Click "Borrow":
Click on the "Borrow" button corresponding to the asset you wish to borrow (e.g., CHR).
Enter Amount to Borrow and Review Borrow Details:
A "Borrow" pop-up will appear, displaying essential information and input fields:
Amount to Borrow: The field where you'll enter the quantity of assets you wish to borrow.
Interest Rate: The current estimated interest rate you will pay.
Health Factor (Projected): A dynamic preview of how borrowing this amount will affect your overall Health Factor. Pay close attention to this!
Available to Borrow: Your maximum personal borrowing limit for this asset.
4. Executing the Borrow Transaction
Enter Borrow Amount & Confirm Information:
Input the desired amount you wish to borrow into the designated field. Carefully review all displayed information within the pop-up, particularly the projected Health Factor, to ensure it aligns with your risk tolerance.
Click "Borrow" and Confirm in Your Wallet:
Click the main "Borrow" button within the pop-up. Your connected wallet (e.g., MetaMask) will then display a separate pop-up or notification asking for your transaction confirmation. Review the details of this transaction and click "Confirm".
5. Managing Your Borrowed Position
After successfully confirming the transaction, your Udon Finance dashboard will update to reflect your new loan.
Dashboard Update & "Your Borrow" Table:
The DApp will automatically refresh. A new section or updated table titled "Your Borrow" will now appear on your dashboard. Here, you can clearly see the asset you've just borrowed, along with its current outstanding amount and accumulated interest.
Manage Your Loan:
From this "Your Borrow" section, you can:
Repay: Initiate a repayment for your loan (we'll cover this in detail in the "Repaying Your Loan" section).
Borrow More: If your collateralization allows, you can choose to borrow additional amounts of the same or different assets.
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