Borrowing allows users to obtain liquidity from their assets, without having to close their position on the assets. This allows a user that is longing their assets with upside to borrow against it for any reason they choose.
To get started with borrowing, a user must first deposit their assets to be used as collateral. For step by step instructions, please click here.
The potential borrowing amount is dependent on the value of assets deposited, user health factor, as well as the available liquidity. If there is not enough liquidity, or if your health factor drops below a certain threshold, you will not be able to borrow. For more information regarding collateral parameters, please click here.
No. The rates fluctuate and are subjected to rebalancing over a longer term as a response to changes in market conditions, supply and demand, overall market conditions, and other factors. They may or may not be optimal rates.
Interest rates are determined by the borrowing rate, as determined by the supply and demand ratio of the asset.
Please be diligent in monitoring your health factor. Fees from borrowing rates can add up, and put your loan at risk of liquidation.
There are a few reasons:
No collateral factor: this means there is not enough liquidity on the blockchain to safely enable borrowing of the asset
Not enough liquidity: this means there is insufficient liquidity. Waiting for more liquidity to be supplied will allow you to borrow.