Borrowing
Last updated
Last updated
Borrowers deposit collateral tokens into pools and may borrow quote tokens. A liquidation price will be set depending on how much is borrowed relative to the value of the collateral.
Easy
The Summer.Fi app (soon)
Static Open Source Frontend (soon)
Other apps with Ajna integrated (soon)
Advanced
Use the SDK to build an interface or bots (soon)
Ether.js or Web3.py (interacts with Ethereum) & connect to your own node (soon)
Users can borrow any ERC-20 token.
Users can use any ERC-20 token, ERC-721 NFTs, or 721-subset as collateral. If a pool doesn't exist for a token, one can be created. The only other limitation is finding someone to lend Quote Tokens.
The following types of tokens are incompatible with Ajna, and no countermeasures exist to explicitly prevent creating a pool with such tokens, actors should use them at their own risk:
NFT and fungible tokens which charge a fee on transfer.
Fungible tokens whose balance rebases.
The following types of tokens are incompatible with Ajna, and countermeasures exist to explicitly prevent creating a pool with such tokens:
No.
Origination Fee This fee is charged to all debt and is the greater of one week of interest or 0.05%.
Variable Interest Rate This is the APR being paid on the borrower’s debt, which is subject to change every 12 hours.
Yes. The minimum borrow size is 10% of the pool’s average loan’s debt. A minimum is set only after 10 borrow positions are created in a given pool. The maximum borrow size depends the pool's available lender liquidity.
Each pool has its own interest rate that should be displayed in the pool information. The interest rate is subject to change every 12 hours.
Yes, so cannot go below 0.001% or above 400%.
~3.5 days assuming consistent interest rate updates every 12 hours.
It is a special function that resets the pool's interest rate under certain conditions. If the pool rate becomes too high for a protracted period, all debt could eventually exit the pool. This would result in low utilization,so eventually the pool would move back to an equilibrium interest rate, but it could take a long period of time.To return the pool to a reasonable range of market interest rates quickly, there is an interest rate reset mechanism: if the debtEMA is less than 5% of the meaningfuldepositEMA and the interest rate exceeds 10%, then the rate will immediately be reset to 10%.
Yes, but the rate is only fixed for 12 hours at a time, starting from the time of the last rate update. Rates may change once every 12 hours if conditions are met.
Ajna loans can be paid back at any time.
Ajna has a minimum borrow amount for loans, this means users might be unable to pay back a partial amount of their debt if it would push their balance below this minimum. If this happens, try paying back less or the entire amount.
Loans can be repaid at any time, there is no early repayment penalty.
The protocol gets hacked or exploited.
Your loan gets liquidated.
Your loan gets liquidated unfairly, leaving you with claimable collateral. If this happens the liquidator loses money on the bond they had to post in order to send your loan to liquidation.
If the value of the collateral, as measured by the external market price, drops below the loan's Threshold Price (debt/collateral), then before that point the system would have liquidated the loan. Once the market price crosses below a loan's Neutral Price it becomes profitable to liquidate the position. The Neutral Price is always set above the Threshold Price of a given loan.
When a loan is liquidated it will proceed to an auction where a liquidation penalty is applied to each sale of collateral. When the liquidation is complete the borrower is no longer responsible for paying back their debt balance since the system sold their collateral and to cover the balance. In some cases there may be collateral left over that the user can claim.
No. Once a loan has been liquidated, the loan cannot be returned from liquidation
The Liquidation Penalty, also known as the Borrower Take Penalty is applied to debt when collateral is taken during a liquidation auction.
The liquidation price is something that should be displayed by the interface you use to manage the loan. A borrower has full control of their liquidation price. A liquidation price is set when a loan is created and can move with changes in debt or collateral amounts. Under normal circumstance the liquidation price moves slightly over time as interest accrues to a borrower's debt.
When a loan is initiated or modified (the first debt, additional debt drawn, or collateral is removed from the loan), the neutral price is set to
Yes.
Fungible tokens with more than 18 decimals or 0 decimals, whose decimals() function does not return a constant value, or which do not implement the optional function.
Liquidation Take Penalty (AKA the ) This fee is maximum 4.5%, and is applied once the first sale of collateral occurs and is variable depending on the collateral price settled at the auction as well as the liquidator's Bond Factor.
Transaction Fees These are fees that are charged on blockchain transactions generally, the more complex the transaction, the larger the fee. For specifics, see the .
Interest rates are determined by pool utilization. If there is a surplus of lender liquidity, rates are lowered, and if there is a shortage of lender liquidity, rates are increased. Rates can change once every 12 hours and occur in +- 10% increments. If the rate is rising, the previous rate is multiplied by 1.1; if the rate is decreasing, the previous rate is multiplied by 0.9 For a specific overview of the interest rate algorithm, see section 8 of the .
In Ajna the acts as the liquidation price.
where r is the current borrower rate of the pool. As time passes, the neutral price increases at the same rate as interest. Read more in section 7.3.1 of the
To determine whether a loan is insufficiently collateralized there are three important variables being used; the loan’s , the loan’s and the pool’s . TP is set by the borrower and is a loan’s debt multiplied by 4%, divided by the collateral. A pool’s LUP is defined as the lowest collateral price bucket against which someone is actively borrowing. If the borrower’s TP crosses above the LUP, then their position is eligible for liquidation. The NP of a loan is set at origination and acts as the liquidation price of the loan. Meaning that a loan must be both eligible and out of position with respect to the NP for it to be profitably liquidated. A loan is liquidatable when the market price of the collateral crosses below the NP. If TP is above LUP, you are eligible for liquidation, but realistically the market price of collateral needs to be below liquidation price (Neutral Price) for KICKER to be financially motivated to send Borrower to liquidation.
