Borrowing
Borrowers may select one of these methods and put up collateral to borrow money. The fact that these loans are over collateralized is a significant aspect of them. As a result, borrowers must use cryptocurrency as security, putting up more than they borrow.It should be noted that there is a cap on the amount that can be borrowed;this is determined by two variables. The first is the amount that lenders deposit in the financing pool of the protocol. Second is the caliber, or "collateral element" of the coins the borrower has pledged as security.
Borrowers have the option to deposit a variety of coins, each with a unique collateral component. The total of these coin amounts multiplied by the collateral; factor will then represent the user's borrowing cap. Because the procedure will often automatically liquidate the collateral at a significant discount to pay back the loan if the limit is exceeded, it is highly recommended to keep an eye when to deposit more collateral or keep a sufficient buffer.
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