How to: Take out a DeFi loan on FilDA
The banking (lending and borrowing) protocol on FilDA.io is a revision based on Compound. It allows users to deposit supported assets and earn interest on these deposits (lending), and also allows users to use their deposited assets as collateral against loans of supported assets (borrowing).
Each loan is over-collateralized, this means you must deposit more than you borrow. Loans have no time limit for repayment, require no credits checks or divulgence of personal information and borrowed funds are instantly transferred to your connected wallet. Once in your wallet they are wholly yours.
Liquidations can occur when the deposited amount of collateral is no longer enough to cover the value of the permitted loan (variable borrowing threshold percentages exist for each asset) due to market conditions. On top of the loan utilisation thresholds, FilDA applies an initial safety line of 85%.
Users can choose which assets deposited are available for borrowing by other users, these transactions are handled by the protocol’s smart contracts. Any deposited funds can be selected for use as collateral for a user’s personal borrowing.
A simple example:
Lending and Borrowing:
- 10,000 USD in $BTC deposited
- 85% loan utilisation for $BTC (10,000 USD * 85% = 8,500 USD)
- 85% safety line (850 USD * 85% = 7225 USD)
- 7,225 USD loan limit
- Loan utilisation rate is 85%
When the loan utilisation in a user’s account exceeds 100%, the FilDA protocol will trigger liquidation, in which the user’s collateral is put into the liquidation market and anyone can participate in the liquidation.
Continuing the above example:
- Price of $BTC drops by 10% (collateral = 9,000 USD)
- 85% loan utilisation for $BTC (loan limit is 7,650 USD)
- Loan limit is still higher than the actual loan, liquidation not triggered
- Loan utilisation rate rises to 94%.
And continuing further:
- Price of $BTC drops 6% more, (loan limit = 8,460 USD)
- 85% loan utilisation for $BTC (loan limit = 7.191 USD)
- The actual loan of (7,225 USD) > available collateral deposited (7,191 USD)
- Liquidation triggered because the loan utilisation rate exceeds 100%
Step by step guide to Lending and Borrowing
Deposit for Lending
- Deposit assets — click deposit next to the desired asset
- Enter amount to deposit and click deposit
- Approve the transaction with your wallet
- Click Collateral button in Savings tab and approve the transaction with your wallet
- Choose asset to borrow and click Borrow
- Choose how much to borrow. Click Borrow and approve the transaction with your wallet.
A Loan Percentage Used bar will show you how much of your available collateral is used. Borrowing is at your own risk and volatile market conditions can quickly change the Loan Percentage Used value. Caution is recommended, but users are free to make their own strategic decisions.
- The borrowed funds will now be in your wallet and can be swapped, withdrawn, re-deposited as your DeFi strategic decision-making requires.
Wau.Finance have developed a tool to help track loans and deposits on FilDA.io. Find out more here: https://link.medium.com/YKt5NBLLjjb