Borrowing

Why would I borrow instead of selling my assets?

Opting to sell your assets means you're finalizing your position in that specific asset. If you're bullish on the asset's future, selling would mean you miss out on potential value appreciation. Borrowing allows you to access liquidity (or working capital) without parting with your assets. Common reasons for borrowing include unforeseen expenses, leveraging existing assets, or seizing new investment opportunities.

How do I borrow assets?

Before you can borrow, you must first provide an asset to serve as collateral (for more details, refer to the Supplying & Earning FAQ section). Once done, navigate to the Borrow section and select “Borrow” for the asset you wish to borrow. Determine the amount based on the collateral you've provided. Choose between a stable or variable interest rate and finalize your transaction. You retain the flexibility to modify your interest rate choice at any point.

What is the borrowing limit?

Your borrowing capacity is contingent on the value of the assets you've supplied and the prevailing liquidity. For instance, borrowing may be restricted if there's insufficient liquidity or if your health factor doesn't permit it. Comprehensive details on available collaterals and their respective borrowing parameters can be found in the risk parameters section.

Which asset can I use for repayment?

Your repayment should be in the same asset you borrowed. For instance, if you've borrowed 1 XLM, you'll repay 1 XLM plus any accrued interest. The latest version of the AssetDesk protocol also allows you to use your collateral for repayment. If you prefer a USD-based repayment, you can borrow stablecoins like USDC and so on.

How do stable and variable rates differ?

Stable rates function akin to short-term fixed rates but may adjust over the long run based on market dynamics. The variable rate fluctuates based on supply and demand within AssetDesk. As the name suggests, the stable rate remains relatively constant, offering predictability in interest payments. Conversely, the variable rate is subject to change and might offer better rates depending on market conditions. You can toggle between stable and variable rates anytime via your dashboard.

If you have further questions or encounter any issues, don't hesitate to contact the AssetDesk team through our Discord or Telegram channel.