Borrowing
Access Liquidity Without Selling
Borrow from Everst using your supplied assets as collateral. All loans are over-collateralized with no fixed repayment schedule—repay whenever you want.
Why Borrow?
Common Use Cases
1. Access Liquidity Without Selling Keep your stock token long positions while accessing cash for expenses or investment opportunities.
2. Tax Efficiency In many jurisdictions, borrowing isn't a taxable event, unlike selling.
3. Hedging Strategies Borrow stock tokens for portfolio balancing, flexibly adjusting positions based on market changes.
4. Leverage Trading Borrow to increase your position size (advanced strategy with higher risks).
5. Arbitrage Opportunities Borrow at lower rates to deploy capital in higher-yielding strategies.
How Borrowing Works
Process
Supply collateral to the protocol
Enable assets as collateral (if not automatic)
Borrow up to your limit based on collateral factors
Pay interest continuously on borrowed amount
Repay anytime to reclaim your collateral
Key Mechanics
Over-Collateralization Required
Your maximum borrowing capacity equals the sum of each collateral's value multiplied by its collateral factor.
Example:
If you supply $10,000 worth of AAPL tokens with a 75% collateral factor, you can borrow up to $7,500 worth of any asset. The $2,500 difference serves as a safety buffer protecting against price volatility.
Current Borrow Rates
Rates update dynamically based on utilization
USDT
5-15%
Market-dependent
40-80%
Configurable
Low
AAPL
6-18%
Market-dependent
30-70%
Configurable
Medium
TSLA
8-25%
Market-dependent
35-75%
Configurable
Medium-High
NVDA
10-30%
Market-dependent
40-80%
Configurable
Medium-High
SPY
4-12%
Market-dependent
25-65%
Configurable
Low-Medium
Note: Rates and liquidity change dynamically based on supply and demand
Borrowing Power Calculation
Your borrowing power depends on:
Value of supplied assets
Collateral factors of those assets
Current oracle prices
Collateral Factors
USDT Stablecoin
85%
85%
88%
Conservative base allocation
Blue-chip Stock Tokens (AAPL, MSFT)
75%
75%
80%
Core holdings
Growth Stock Tokens (TSLA, NVDA)
70%
70%
75%
Growth allocation
ETF Indices (SPY, QQQ)
75%
75%
80%
Diversified investment
Detailed Example
Your Supplied Assets:
- $5,000 worth of AAPL = $5,000 (75% collateral factor)
- 10,000 USDT = $10,000 (85% collateral factor)
- $3,000 worth of TSLA = $3,000 (70% collateral factor)
Borrowing Power Calculation:
- AAPL: $5,000 × 0.75 = $3,750
- USDT: $10,000 × 0.85 = $8,500
- TSLA: $3,000 × 0.70 = $2,100
Total Borrowing Power: $14,350Health Factor Management
Your Health Factor is crucial for avoiding liquidation:
Calculation
Health Factor equals your total collateral value multiplied by the liquidation threshold, divided by your total borrowed amount.
Health Factor Zones
> 2.0
Very Safe
Comfortable buffer
1.5 - 2.0
Safe
Monitor occasionally
1.25 - 1.5
Caution
Monitor closely
1.0 - 1.25
Risk Zone
Add collateral or repay
< 1.0
Liquidation
Subject to liquidation
Real-World Scenario
Initial Position With $10,000 worth of AAPL collateral and 5,000 USDT borrowed, your Health Factor is 1.6 (safe).
Market Movement If AAPL drops 30%, your collateral value falls to $7,000 while debt remains 5,000 USDT. Your Health Factor drops to 1.12, entering the risk zone.
Required Action To restore safety, you need to either supply additional collateral or repay approximately $1,000 of your loan.
Interest Rate Dynamics
How Rates Are Determined
Everst uses a Jump Rate Model that adjusts rates based on utilization:
When utilization is below 80%, rates increase gradually. Above 80%, rates jump sharply to ensure liquidity remains available for withdrawals.
Typical Parameters:
Base Rate: 2% APY
Multiplier: 0.15 (15% slope)
Kink: 80% utilization
Jump Multiplier: 1.0 (100% slope after kink)
Interest Accrual
Interest accrues continuously with each block:
Compounds continuously
No payment schedule
Added to your borrow balance
Paid when you repay
Example Interest Calculation:
Borrowing 10,000 USDT at 7% APY results in approximately $1.92 daily interest, $58 monthly interest, and $700 annual interest.
Borrowing Strategies
Conservative Borrowing
Keep Health Factor > 2.0
Borrow USDT using stock token collateral
Use for real-world expenses
Example: Supply $20,000 worth of AAPL, borrow 5,000 USDT (Health Factor = 3.2)
Leveraged Long Position
Supply stock tokens, borrow USDT, buy more stock tokens
Amplifies gains and losses
Requires active management
Example:
Supply $10,000 worth of TSLA
Borrow 7,000 USDT
Buy more TSLA with USDT
Profit if TSLA gains > borrow rate
Stock Rotation Strategy
Supply outperforming stock tokens
Borrow underperforming stock tokens
Based on fundamental and technical analysis
Example: Supply NVDA (AI boom), borrow traditional bank stocks
Yield Arbitrage
Borrow low APY assets
Deploy in higher yield strategies
Pocket the difference
Example: Borrow USDT at 5%, earn 8% in other DeFi protocols = 3% profit
Managing Your Loan
Adding Collateral
Supply more assets anytime
Immediately increases borrowing power
Improves Health Factor
Partial Repayment
Repay any amount anytime
Reduces interest burden
Frees collateral proportionally
Full Repayment
Repay entire loan + interest
Reclaim all collateral
Close position completely
Interest Management
Interest compounds into principal
Monitor total debt regularly
Consider periodic interest payments
Risk Considerations
Liquidation Risk
Monitor collateral prices
Maintain safe Health Factor
Understand liquidation penalties (configurable incentive for liquidators)
Interest Rate Risk
Rates are variable
Can increase with demand
No rate locks available
Oracle Risk
Prices from external feeds
Potential for temporary mispricing
Multiple oracles for redundancy
Smart Contract Risk
Code vulnerabilities possible
Audited but not risk-free
Insurance options available
Stock-Specific Risks
Price Volatility: Stock token price volatility may trigger liquidation
Market Hours: Follows US stock trading hours, affecting liquidity
Company Events: Earnings, news, mergers affect prices
Regulatory Risk: Impact of stock-related regulatory changes
Best Practices
For New Borrowers
Start with small amounts
Keep Health Factor > 2.0
Borrow USDT first
Set price alerts
Have repayment plan
Risk Management
Never borrow maximum amount
Diversify collateral types
Monitor market conditions
Keep emergency funds ready
Use stop-loss strategies
Monitoring Tools
In-app dashboard
Price alert settings
API for programmatic access
Third-party monitoring services
Advanced Strategies
Stock Event Trading
Pre-Earnings: Position in expected strong performers
Pre-Dividend: Borrow stock tokens to capture dividend rights
Restructuring/M&A: Adjust positions based on corporate actions
Cross-Market Arbitrage
Time Zone Arbitrage: Exploit price differences across markets
Volatility Arbitrage: Interest rate differences during high volatility periods
Liquidity Mining: Borrow then participate in other protocols
Risk-Hedged Portfolios
Beta Hedging: Borrow high-beta stocks to hedge market risk
Sector Hedging: Long/short pairs within same industry
Macro Hedging: Position adjustments based on economic cycles
Practical Calculators
Borrowing Cost Calculation
Borrow Amount: 10,000 USDT
Borrow Rate: 8% APY
Term: 6 months
Calculation:
Daily Interest: 10,000 × 8% ÷ 365 = 2.19 USDT
Monthly Interest: 2.19 × 30 = 65.7 USDT
6-Month Interest: 65.7 × 6 = 394.2 USDTHealth Factor Calculation
Collateral: $15,000 worth of AAPL (80% liquidation threshold)
Borrowed: 10,000 USDT
Health Factor = (15,000 × 0.8) ÷ 10,000 = 1.2Gas Costs
Borrow: ~$0.20-0.30
Repay: ~$0.15-0.25
Add collateral: ~$0.15-0.25
Gas costs vary by network, BSC typically lowest
Next Steps
Ready to borrow? See How to Borrow
Manage collateral Review collateral factors section above
Avoid liquidation Monitor your Health Factor
Understand risks Review Risk Management
All loans are subject to liquidation if under-collateralized. Borrow responsibly and monitor your positions.
Last updated