2. Lending & Borrowing

Lending and Borrowing on Reax

Step 1: Choose the Lending Market

Reax offers two types of lending markets:

  • Reax Lending: This market supports lending and borrowing for non-synthetic assets such as ETH, BTC, and USDT.

  • Crypto Lending: This market caters to lending and borrowing within the Crypto Synthetic Pool, including assets like cETH, cBTC, and cUSD.

Choose the market that aligns with your lending or borrowing preferences.

Step 2: Supply Collateral

In order to participate in lending or borrowing, you need to supply collateral. The collateral acts as a security against the borrowed assets. Different markets may have specific collateral requirements, so ensure you have the necessary assets available in your wallet.

Step 3: Borrow Assets

Once you have supplied collateral, you can proceed to borrow assets. Select the type of debt you prefer:

  • Stable Debt: This type of debt maintains a stable value, making it ideal for those seeking stability in their borrowing.

  • Variable Debt: With variable debt, the value fluctuates based on market conditions. It allows for potential gains if the market rises but also carries higher risk.

Choose the debt type that suits your borrowing strategy and specify the amount of assets you wish to borrow.

Step 4: Repay Debt and Withdraw Collateral

When the time comes to repay your borrowed assets, navigate to the lending platform and initiate the repayment process. Once the debt is fully repaid, you will be able to withdraw your collateral from the lending market.

Please note that failing to repay the borrowed assets within the specified terms may result in liquidation of your collateral, as outlined by each market's rules.

Step 5: Monitor Your Positions

It's crucial to stay informed about your lending and borrowing positions. Regularly check the status of your borrowed assets, outstanding debt, and collateral value. This will help you make informed decisions and manage your positions effectively.

Risks

There are some risks associated with lending and borrowing on Reax. These risks include:

  • Liquidation risk: If the value of the asset that you lend falls below the amount that you borrowed, your collateral may be liquidated to repay the loan.

  • Impermanent loss: If you borrow an asset and the price of the asset goes up, you may lose money on the difference between the price when you borrowed the asset and the price when you repay the loan.

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