Borrowing Assets
Borrowing assets on Udon Finance allows you to access liquidity without selling your valuable crypto holdings. This feature lets you leverage your supplied assets as collateral, providing capital while maintaining long-term positions. Thanks to Chromia's efficient blockchain, borrowing is fast and gas-free.
Understanding your borrowing capacity & collateral requirements
Before you borrow, 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 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.
Example: If you supply USDC with a value of $200 as collateral, and the asset you wish to borrow (e.g., CHR) has an LTV of 70%, you can borrow a maximum of $140 ($200 * 70%).
Important note on Health Factor: As you approach your maximum borrowing limit, your Health Factor will decrease, nearing 1. Monitor this metric closely — borrowing too close to the limit significantly increases your liquidation risk. Always leave a safety buffer!
Identifying assets available for borrow
Your dashboard provides an overview of assets you can borrow based on your current collateral.
Explore the "Assets to Borrow" table on your dashboard. The table displays critical information for each borrowable asset:
Asset: The cryptocurrency available to borrow (e.g., CHR, USDT).
Available: The maximum amount of that specific asset you can currently borrow, considering your collateral and the asset's LTV (your personal borrowing capacity).
Max Available in Pool: The total amount of that asset currently available in the liquidity pool — 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: Contains the "Borrow" and "Details" buttons.
Accessing the Borrow pop-up
Once you've chosen an asset to borrow, initiate the transaction:
Click the "Borrow" button corresponding to the asset you wish to borrow (e.g., CHR).
Enter amount to borrow and review borrow details: the Borrow pop-up will show:
Amount to Borrow: field to enter the quantity you wish to borrow.
Interest Rate: the current estimated interest rate.
Health Factor (Projected): preview of how borrowing this amount affects your Health Factor.
Available to Borrow: your maximum personal borrowing limit for this asset.
Executing the borrow transaction
Enter borrow amount & confirm information: input the desired amount and carefully review the displayed information, especially the projected Health Factor.
Click "Borrow" in the pop-up and confirm in your wallet: your connected wallet (e.g., MetaMask) will prompt you to confirm the transaction. Review the details and click "Confirm".
Managing your borrowed position
After confirming the transaction, your Udon Finance dashboard will update to reflect your new loan.
Dashboard update & "Your Borrow" table: The DApp will refresh and a section titled "Your Borrow" will appear, showing the asset borrowed, outstanding amount, and accumulated interest.
Manage your loan from the "Your Borrow" section:
Repay: initiate a repayment for your loan (see Repaying Loans).
Borrow more: if your collateralization allows, borrow additional amounts of the same or different assets.
Last updated 6 months ago