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Borrow

Learn how to borrow assets on Covenant

About

To borrow on Covenant, users swap zTokens for a desired loan currency. zTokens are minted when prospective borrowers take out a loan. All loans are over-collateralised, which means that users must deposit more value into the protocol than they can borrow. There are two interfaces for borrowing on Covenant, 'retail' and 'pro.' Both perform the same actions, swapping zTokens for a basis currency, but the 'pro' UI is for more sophisticated users and traders who would like more granular control of their transactions.

Step-by-step, 'retail' version

  1. 1.
    Borrowing requires a user to have already deposited collateral. Make sure you have done so.
  2. 2.
    Making sure the 'RETAIL' slider, in the upper righthand corner is selected, click the 'Borrow' tab from the right-hand window, pictured below. Enter your desired borrow amount and click 'Borrow {loan currency}.'
  1. 3.
    Approve the necessary transaction approvals in your wallet. Once approved, your debt and position summary stats will be updated to reflect the newly issued loan. Note, the borrower APY, below at 4.18%, is floating, not fixed, and is determined by the zToken spot price. The zToken price and the interest rate are inversely related. Also note, your wallet balance, highlighted below in pink, reflects your newly issued loan amount.

Step-by-step, 'pro' version

  1. 1.
    Borrowing requires a user to have already deposited collateral. Make sure you have done so.
  2. 2.
    Click the slider in the upper righthand corner over to 'PRO'
  3. 3.
    Make sure the swap interface is configured to swap zTokens for your desired loan currency, not the other way around. If it isn't, click on the highlighted button below to switch the swap direction.
  4. 4.
    Enter the number of zTokens you would like to swap for the basis currency. Reminder, 'taking out a loan' on Covenant means swapping zTokens for a basis currency. Click 'Submit' and approve the necessary transaction approvals through your wallet.
  5. 5.
    Your debt and position summary stats will be updated to reflect the newly issued loan. Note, the borrower APY, below at 4.22%, is floating, not fixed, and is determined by the zToken spot price. The zToken price and the interest rate are inversely related. Also note, your wallet balance, highlighted below in pink, reflects your newly issued loan amount.
Last modified 4d ago