Borrow
To borrow from Blend, users must post sufficient collateral to the lending pool they want to borrow from. The collateral is also lent to the pool, generating interest for the borrower. The required collateral amount depends on the Collateral Factor (CF) of the collateral and the Liability Factor (LF) of the borrowed asset.
Managing Your Position:
Once you have borrowed assets on Blend, managing your position is crucial to avoid liquidation and maintain flexibility. Here’s how you can manage your position:
Decrease Collateral: You can withdraw some of your collateral if your position allows it, meaning the remaining collateral still satisfies the required ratio.
Repay Borrowed Assets: You can repay the borrowed assets at any time. Repaying the debt reduces your liabilities and the risk of liquidation.
Interest: Interest accrues automatically on borrowed assets. As the treasury does not need any of the interest it all given to the backstop to encourage backstop deposits securing the pool. The interest rate for each stablecoin can be changed by the DAO. When borrowing you can see the the interest rate calculated per year.
Collateral and Liability Factors:
Collateral Factor (CF): This represents the percentage of the collateral value that can be used to secure a loan. A higher CF means you can borrow more against your collateral.
Liability Factor (LF): This indicates the safety margin for borrowing a particular asset. A lower LF means higher risk, requiring more collateral to borrow the same amount.
Maintaining Your Position: It's essential to keep an eye on the value of your collateral and the borrowed assets. If the value of your collateral decreases or the value of your liabilities increases, you may need to add more collateral or repay some of the borrowed assets to maintain the required ratio and avoid liquidation.
Last updated