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Overview

The Credit feature enables you to access liquidity without selling your cryptocurrency holdings. Take out over-collateralized loans by pledging crypto assets as collateral, with flexible terms, competitive rates, and real-time liquidation price monitoring.

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What You Can Do

Collateralized Loans

Borrow stablecoins and other assets using your crypto as collateral

Flexible Terms

Choose loan duration, over-collateralization ratio, and repayment schedule

Liquidation Protection

Monitor liquidation prices in real-time to manage risk

Debt Management

Adjust collateral or repay debt anytime to improve loan health

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Key Capabilities

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Loan Types

The LoanComponent supports various loan models:
  • Short-Term: 7-30 day loans with lower origination fees
  • Medium-Term: 30-90 day loans balanced for rate and flexibility
  • Long-Term: 90+ day loans with predictable long-term rates
Each loan type has distinct:
  • APR (Annual Percentage Rate)
  • Over-collateralization requirements
  • Origination fee percentages
  • Minimum/maximum loan sizes

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Loan Interface

The main credit interface (LoanComponent) provides:
  1. Loan Asset Selection: Choose what you want to borrow (e.g., USDC, USDT)
  2. Collateral Selection: Pick which crypto to pledge (e.g., BTC, ETH)
  3. Quantity Input:
    • Enter loan amount in the borrowed asset
    • System auto-calculates required collateral
    • Real-time conversion using useTokenSwap hook
    • Min/Max buttons for quick selection
  4. Loan Type Tabs: Switch between available loan models
  5. Loan Calculator: Displays critical metrics:
    • APY: Interest rate for the loan
    • Over-collateralization: Required collateral ratio (e.g., 150%)
    • Origination Fee: Upfront cost as percentage
    • Origination Cost: Fee amount in borrowed asset
    • Over-collateralization Cost: Extra collateral required
    • Loan Total Cost: Principal + origination + over-collateralization
    • Collateral: Total collateral amount needed
    • Liquidation Price: Price at which loan gets liquidated
    • Daily Cost: Interest accrued per day

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Loan Calculation

The useLoanSelectedData hook computes all loan metrics: 
// Example loan calculation flow:
Loan Amount: 10,000 USDC
Collateral: ETH (price: $2,000)
Over-collateralization: 150%

→ Collateral Required: 10,000 × 1.5 ÷ 2,000 = 7.5 ETH
→ Origination Fee (2%): 200 USDC  
→ Liquidation Price: Calculate based on 150% ratio
If the collateral asset price drops to the liquidation price, your collateral will be automatically liquidated to repay the loan. Monitor this metric closely.

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Loan History

The LoanHistoryTable component shows:
  • All active loans with current health status
  • Historical loan records
  • Filterable by:
    • Loan type
    • Collateral asset
    • Borrowed asset
    • Status (Active, Repaid, Liquidated)
    • Date range via useLoanHistoryFilters

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Manage Existing Loans

For active loans, you can:
Use ManageDebtModal to:
  • Repay partial or full loan amount
  • View current debt balance
  • See interest accrued
  • Check remaining term

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How to Take Out a Loan

1

Navigate to Credit

Go to the Credit page from the main menu. You’ll see the loan interface and your loan history.
2

Select Borrow Asset

Choose what you want to borrow from the “Asset” dropdown. Typically stablecoins like USDC or USDT for accessing USD liquidity.
3

Select Collateral

Choose which cryptocurrency to pledge as collateral. Higher-value, less volatile assets often get better terms.
4

Choose Loan Type

Review the loan type tabs:
  • Compare APY rates
  • Check over-collateralization requirements
  • Consider origination fees
  • Match duration to your needs
5

Enter Loan Amount

Input how much you want to borrow:
  • Type the quantity directly
  • Use “MIN” for minimum loan amount
  • Use “MAX” for maximum based on available collateral
  • System auto-calculates required collateral
6

Review Loan Terms

Carefully review all displayed metrics:
  • Total collateral required
  • Liquidation price
  • Daily interest cost
  • Origination fee
  • Total loan cost
7

Confirm Loan

Click the “Loan” button. The system will:
  • Validate inputs via useValueVerifier
  • Check available collateral balance
  • Submit loan via usePostLoan mutation
  • Display liquidation price in success toast
  • Update loan history

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Loan Workflow

The loan creation process: 
// From credit.tsx
const handleLoan = (userId: string, ratio: string, size: string, typeId: string) => {
  postLoan.mutate(
    { userId, ratio, size, typeId },
    {
      onSuccess: (data) => {
        showToast(
          `Loan successful. Liquidation price: ${data.liqPrice} ${data.sizeCurrencyId}/${data.collatCurrencyId}`,
          ToastType.SUCCESS
        );
      },
      onError: (err) => {
        showToast(getDisplayMessage(err, "Loan failed"), ToastType.ERROR);
      }
    }
  );
};

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Loan Health Monitoring

For active loans, monitor these key indicators:
  1. Collateral Ratio: Current collateral value ÷ loan value
    • Should stay above over-collateralization requirement
    • Warning if approaching liquidation threshold
  2. Liquidation Price: Critical price level for collateral
    • Loan liquidates if collateral price hits this level
    • Calculated based on required ratio
  3. Accrued Interest: Daily interest adding to loan balance
    • Compounds based on APY
    • Added to total debt owed
The LoanInfo component displays real-time loan health metrics for all active positions.

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Data Components

Key hooks used by the credit feature:
  • useLoanData: Fetches available loan types and user’s eligible assets
  • useLoanSelectedData: Computes all loan metrics (liquidation price, costs, etc.)
  • useTokenSwap: Handles collateral ↔ loan asset conversions
  • useValueVerifier: Validates loan and collateral amounts
  • usePostLoan: Mutation hook for creating loans
  • useLoanHistoryData: Retrieves user’s loan history
  • useLoanHistoryFilters: Manages history table filters
  • useLoanEventsData: Tracks loan-related events (repayments, liquidations)

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Risk Management

Liquidation Risk: If your collateral value drops significantly, your loan may be automatically liquidated. Always maintain a healthy collateral ratio above the minimum requirement.
Add extra collateral beyond the minimum requirement to create a safety buffer against price volatility. A 200% collateral ratio is safer than 150%.
Set up price alerts for your collateral assets to get notified before approaching liquidation levels.

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Loan Examples

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Conservative Loan

  • Borrow: 5,000 USDC
  • Collateral: 2 ETH (@ 2,500=2,500 = 5,000)
  • Over-collateralization: 200% (conservative)
  • Required Collateral: 10,000 ÷ 2,500 = 4 ETH
  • Liquidation Price: ~$1,250 per ETH
  • APY: 6.5%
  • Daily Cost: 0.89 USDC

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Aggressive Loan

  • Borrow: 10,000 USDC
  • Collateral: 3 BTC (@ 50,000=50,000 = 150,000)
  • Over-collateralization: 150% (minimum)
  • Required Collateral: 15,000 ÷ 50,000 = 0.3 BTC
  • Liquidation Price: ~$40,000 per BTC
  • APY: 8.2%
  • Daily Cost: 2.25 USDC

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Session Modes

In mock/demo mode, loan simulations are available but actual loan creation is restricted. The interface will show “isSessionModeMock” warnings.

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Troubleshooting

Loan button is disabled:
  • Check you have sufficient collateral balance
  • Verify loan amount is within min/max bounds
  • Ensure both asset and collateral are selected
  • Confirm collateral value meets over-collateralization requirement
Collateral not auto-calculating:
  • Wait for useTokenSwap hook to fetch conversion rates
  • Verify both assets have valid market prices
  • Check network connection
Error: “Loan failed”
  • Review error message from getDisplayMessage
  • Check if assets are supported for loans
  • Verify account has borrowing permissions
  • Ensure no existing loan limits are exceeded
  • Portfolio - View total loan obligations
  • Activity - Track loan events and repayments
  • Governance - Loan policies and approval workflows

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