Borrow

Borrowing on Qubit

How does borrowing work?

Borrowers start borrowing Tokens by posting collateral to Qubit's Borrow Markets.

This is also known as taking a position on an investment. You can initiate a position by calling up to the corresponding maximum loan-to-value ratio (LTV) of the Token you are interested in borrowing. This LTV ratio is equal to the value of the borrowing Tokens to the value of the Tokens posting as collateral, all in USD($). Once sufficient collateral is posted, you immediately receive the Tokens in your wallet and start to pay interest for them, calculated by the Borrower Interest Rate. For more information on Borrower Interest Rate, move onto the next section or click here: [jump]

For example, if a Borrower is interested in borrowing $200 worth of specific assets to invest elsewhere, the Borrower will be able to borrow a maximum of the LTV × Value of the Collateral, where the current LTV is set to be a maximum of 50% in Qubit protocol.

Therefore, in order to borrow $200 worth of the interested assets, a Borrower posts 1 BNB worth $400 as collateral. The maximum LTV ratio for BNB is 50%. The borrower may borrow up to 200 BUSD. This is 50% of the value in USD of the 1 BNB posted as collateral*. They immediately receive $200 worth of 200 BUSD in their wallet, which they can do whatever they want with, and start paying an Interest Rate for it, which is based on their Utilization Rate of existing Liquidity in the Qubit Markets.

Example

Bob the Borrower deposits BNB as collateral and borrows an amount of USDT limited by the maximum loan-to-value ratio for his asset deposited as collateral.

If the health factor of Bob's loan drops to levels that allow for liquidation, Bob's position will be liquidated and he will lose some of his collateral. Liquidators pay the portion of the debt owed by Bob on his behalf and receive a portion of Bob's collateral as a reward.

If the loan's health factor remains at a non-liquidatable level by the time Bob is ready to return the borrowed USDT, Bob may pay back the USDT to the pool with interest.

Additional support for other collaterals will be added as the Qubit Supply & Borrow Market develops.