Borrowing crypto assets using collateralised assets

Keom allows users to borrow crypto assets against the value of crypto assets that they have previously supplied. The amount that can be borrowed against an asset is set at the protocol level. When a user takes out a loan, their account will start accruing interest per second on the borrowed assets.

If supplied assets were left enabled as collateral by default, it is necessary to pay back the loan, plus interest, in order to free all supplied assets and withdraw them.

The asset’s Loan-to-Value ratio is used to determine the maximum loan amount a user can borrow according to the current value of their supplied assets. If a user has supplied $1000 USD worth of ETH as collateral, and the Loan-to-Value figure is 60%, then the user can borrow up to $600 USD worth of assets.

As the Loan-to-Value figures for assets differ, they act cumulatively to allow borrowing. For example, if a user were to supply $1,000 USD of WETH and $1,000 USD of WBTC, the amount of value they could borrow would be $1,250 USD, as while the Loan-to-Value figure for WETH is 75%, WBTC has a Loan-to-Value set at 75% ($750+$750=$1,500).

LTV figures on Manta Pacific Network








Why borrow?

A user may want to maintain exposure to their current asset that’s appreciating (i.e. holding a long position in profit) while looking to enter another position with additional capital. As a result, the user would be able to borrow capital by using the asset they’re currently holding by depositing it in the protocol instead of fully selling it off. This provides the user with liquidity without the need to sell their current asset.

Example: Chad requires additional liquidity to enter a new position but does not want to sell his $ETH tokens as he expects his $ETH tokens to increase in value. He may do the following:

He may do the following:

  1. Deposit $MATIC into Keom as collateral

  2. Borrow $USDT using his $ETH as collateral

  3. Use the borrowed $USDT to buy new positions

The user's Health Factor should be monitored to ensure it does not fall below 1, as this will result in the liquidation of the user's collateral in order to repay the debt, plus additional liquidation fees

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