When borrowing, users deposit assets into the lending pool and withdraw assets they wish to borrow from the pool. To repay, the borrower returns the borrowed assets to the lending pool. Then they are allowed to withdraw their collateral if they choose.
Collateral is the assets the borrower pledges to secure the repayment of a loan. If a loan ever becomes undercollateralized, meaning its repayment is at risk, the loan is liquidated, and a portion of the borrower's collateral is forfeited. YieldBlox uses pool tokens as collateral. This means that borrowers will receive interest on their collateral deposits!
Borrowers must have a health factor of above 1.10 after loan origination in order to borrow assets from YieldBlox. They must maintain a health factor of above 1.00 in order to avoid liquidation. Health factors are based on a collateral assets loan-to-value ratio, so collateral requirements vary depending on the asset the user is collateralizing. Loan-to-value ratios are set by governance proposals, so they can change.
The assets provided for collateral are converted into pool tokens, so they can be lent out. This allows borrowers to generate interest on their collateral deposits. These pool tokens are then locked in claimable balances claimable by only the pool account. Collateralized pool tokens can be reclaimed by the borrower once they repay their loan. In the case of a liquidation, liquidators will withdraw the collateralized pool token rather than its associated underlying asset.
Borrowers repay loans by returning all borrowed assets and accrued interest to the YieldBlox lending pool. After doing so, they can withdraw their collateral deposits if they wish.
Yes! Borrowers can repay portions of loans at any time. Doing so also lowers their collateral requirements allowing them to withdraw collateral if they wish to.
Yes! YieldBlox enables borrowers to repay loans with collateral. To do so, the collateral balance will be sold for the underlying borrow asset and used to repay the loan. Users must specify the path payment each collateral balance takes to become the underlying borrow asset.