Why should I borrow instead of just selling your assets?
Selling assets means your short positions on that particular asset. For users who believe in the asset appreciating in the long run and decide to keep the asset in your portfolio, then you are not entitled to the potential upside value.
With borrowing, you are able to obtain liquidity (working capital) with your giving up your asset that you are long on. Besides, DeFi borrowing use cases are expanding as the space grows, many market participants often leverage the product offering for unexpected expenses by leveraging their holding for new revenue generation opportunities.
What is the motivation behind launching the ETHA borrowing market?
An automated lending-borrowing market is conducive to a self-sustaining ecosystem as ETHA Lend - the optimization layer trifecta.
With the market’s launch, we have accomplished yet another major tentpole of machinery needed to complete a model framework for the ETHA Lend ecosystem. Our Lending-Borrowing market can tap into a sea of open-source protocols to bring the most optimal opportunities on-chain.
What makes ETHA Lend’s borrowing market unique in a sea of other such DeFi offerings?
Not just another fork: DeFi has been a series of innovations, each one building on top of the next. Forks in DeFi allow a rather altruistic approach allowing the ecosystem to grow and mature toward maximum competitiveness.
At the same time, innovation is key to verticalizing the growth of the same ecosystem. With our lending-borrowing market, we are doing something a little out of the norm, building on top of the existing DeFi layer but with a new tech stack and user experience while also leveraging the best yield opportunities available for our users.
Existing lending/borrowing protocols only allow users to collateralize their tokens or LP tokens as collateral for borrowing. However, here at ETHA Lend, we will become a pioneer in providing a completely new possibility of collateralizing deposits in our vaults.
Taking note of Money Legos: Our lending/borrowing market interacts with the most optimal opportunities on existing protocols, bringing it on-chain. This gives you a better plane of view to compare rates and yields on your mobilized assets. Moreover, it also eliminates all redundancy and manual interaction by acting as a one-stop shop for lenders and borrowers to capitalize on long-term positions.
Enhanced Capital efficiency: In addition to providing instant access to liquidity from your lending positions, allowing you to borrow up to 80% of the value you have deposited in the lending market, the protocol reduces the spread between borrowing and lending rates.
Enhanced Risk Management: Our Debt protection feature provides a 10% cushion to mitigate immediate liquidation while maximizing the utilization rate of your collateral for borrowing an asset. In the near future, we hope to create a function that allows users to leverage Gelato protocol and its “Task” feature to protect their investments and loans from pitfalls such as liquidations. This will be instrumental in protecting our users from costly liquidations via an automated repayment of loans. The repayments can be triggered by the users themselves if the health factors collapse to a certain level.
How much can I borrow?
The maximum amount that you can borrow varies with the value you have deposited and the available liquidity in the markets of your choice.
What is the maximum Loan-To-Value ratio?
Loan-To-Ratio or LTV is the size of your assets in relation to the value of the asset you wish to borrow. The maximum Loan-To-Value ratio defines the maximum amount of asset that can be borrowed with specific collateral.
For instance, at 75% of LTC for every 1000 USD worth of collateral, you can borrow 750 USD worth of a corresponding asset.
What assets do I need to repay?
You can repay your loan in the same asset you borrow. For instance, if you borrow one 1 USDT, you will have to repay in 1 USDT plus the interest accrued.
You can also employ your collateral to repay at a later stage as the ETHA borrow market evolves.
What is the health factor of a loan?
Health factors represent the safety of the assets you deposited versus the borrowed assets and their underlying value. The higher the value of your health factor is, the safer is the state of your fund against a potential liquidation scenario.
What happens when the heath factor is reduced below suboptimal?
Based on the value fluctuations of your deposited asset, the health factor can increase or decrease. If your health factor goes up, it will effectively enhance your borrowing position leading to a liquidation scenario less likely to take place. On the other hand, if the value of collateralized assets versus the borrowed assets decreases then the health factor goes down, causing the liquidation scenario to be more likely.
When do I need to pay back the borrowed amount?
There is no set time period for repaying a loan. As long as your positions and health factor are optimal, you can borrow for an undefined period of time.
However, with passage of time, the interest accrued on the loan will grow causing your health factor to decrease, which may potentially result in your deposited asset more likely to be deposited. Again, the ETHA borrow market will initiate several strategies to protect users assets from possible liquidation scenarios, shortly.
How do I repay the borrowed amount?
In order to repay the borrowed amount, you can simply:
- Go to your “My Portfolio” page
- Choose “Borrowing” from the drop-down menu
- Go to the asset you borrowed
- Hit on the “Repay”button and select the amount you want to repay
Confirm the transaction
How do I avoid liquidation?
In order to avoid liquidation or the reduction of your health factor, you can repay the loan or deposit more assets to keep your health factor optimal. Out of these two channels, repaying the loan helps your health factor much more effectively.
How will the ETHA borrowing market protect me from liquidation?
As we mentioned above, in the near future, we aim to create a function that allows users to leverage Gelato protocol and its “Task” feature to protect their investments and loans from pitfalls such as liquidations. This will be instrumental in protecting our users from costly liquidations via an automated repayment of loans. The repayments can be triggered by the users themselves if the health factors collapse to a certain level.