Borrow

Borrowing tokens from HypurrFi allows users to access liquidity without selling their assets.

Users deposit assets into lending smart contracts and earn on a yield rate determined by permissionless user demand on borrowing those assets. Interest accrues based on the utilization rate, which reflects the percentage of supplied liquidity that is borrowed. Higher utilization rates lead to higher interest rates, adjusting dynamically with demand.

Deposited assets also act as collateral for users to borrow against. The HypurrFi lending model requires an overcollateralized asset ratio for borrowers. Users determine their own collateralization ratio up to 82.5%.

Borrowers face liquidation risk if the value of their collateral falls below the required threshold. Value is determined by an average weighted market price determined by price oracles.

To maintain a healthy ratio and avoid liquidation risk, borrowers should actively monitor their collateralization level, keeping their health factor in check, to assure their borrow positions remain overcollateralised even as market conditions change or interest accrues.