After a user has locked up their collateral, they can borrow against it. The amount the user has borrowed of a given asset is defined as
whereas the borrow balance of a given asset
is defined as the amount borrowed plus accrued interest.
The borrow factor
represents the effective borrowed amount given a borrow, in percent terms. For example, a more volatile asset may have
% (for $10 borrowed, it is as if $11 has been effectively borrowed) whereas a less volatile asset may have
Consider a user who borrows multiple assets. The total borrowed amount
at time t for a given loan’s borrows is:
- denotes the current user borrow balance of a borrow,
- is the price of the borrowed asset,
- is the borrow factor,
- the subscriptrepresents each borrow of the loan where a borrow is a unique pairing of asset and variable/stable rate.
The total borrowed
must not exceed the borrowable amount
, otherwise the loan can be liquidated by a third party:
If a borrow or reduce collateral operation would lead to the above condition being violated then it will be rejected by the protocol.