How to Borrow assets from #dev DeFi
#dev DeFi protocol enables users to borrow Binance Smart Chain assets like BNB, BUSD, CAKE by collateralizing other supported assets. Users now can trade, stake or perform liquidity farming on other platforms to earn profit with an asset that they don’t actually own.
This article will guide you to borrow assets from #dev DeFi step-by-step.
Supply collateral
- To borrow an asset on #dev DeFi, you need to supply collateral first. Choose the asset that you want to use as collateral, enable the asset and supply it to any vault based on your preference. Under each asset, there may has multiple vaults for users to choose from, vaults have different risks and rewards.
- Supplied collateral assets earn interest daily while in the protocol, users cannot redeem or transfer assets while they are being used as collateral. To withdraw your collateralized assets, you need to return the loan principle and interest.
Borrow asset
- After supply collateral, you can borrow any supported assets on #dev DeFi except the asset that you have supplied.
- Maximum amount that you can borrow will depend on Value-to-Loan Ratio of each asset. Value-to-loan ratio is the ratio of your collateral value (in USDT) to the maximum loan value (in USDT) you can borrow from that collateral.
𝑀𝑎𝑥𝑖𝑚𝑢𝑚 𝑐𝑟𝑒𝑑𝑖𝑡 𝑙𝑖𝑛𝑒 𝑝𝑒𝑟 𝑑𝑖𝑔𝑖𝑡𝑎𝑙 𝑡𝑜𝑘𝑒𝑛 = 𝐶𝑜𝑙𝑙𝑎𝑡𝑒𝑟𝑎𝑙𝑖𝑠𝑒𝑑 𝑑𝑖𝑔𝑖𝑡𝑎𝑙 𝑡𝑜𝑘𝑒𝑛/ 𝑉𝑎𝑙𝑢𝑒 − 𝑡𝑜 − 𝑙𝑜𝑎𝑛 𝑟𝑎𝑡𝑖𝑜 𝑜𝑓 𝑡ℎ𝑎𝑡 𝑑𝑖𝑔𝑖𝑡𝑎𝑙 𝑡𝑜𝑘𝑒
For example: CAKE has Value-to-Loan Ratio of 200%, if you supplied $1000 of BNB to borrow CAKE then you can borrow maximum $500 worth of CAKE.
3. Liquidation helps protect lenders’ principal. When the margin level of a borrowing position falls below the minimum margin level, the corresponding collateral will be posted on the liquidation market at 8% discount from market value for anyone to take. By closing at-risk borrowing positions, liquidators help #dev DeFi recover the borrowing assets and make profit from the discounted collateral.
Tutorial video
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