Borrowing

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Borrowing

How do I borrow?
Connect your wallet to the Yield application. Begin by choosing “Borrow” and selecting the asset you wish to lend. Choose the loan that best fits your needs.
What do I need before I can borrow?
You will need ETH for gas fees and an asset you will put up as Collateral.
Note: if you plan to use WETH as collateral, you must first wrap the ETH into WETH. You can use SushiSwap to do this by trading ETH for WETH. You'll notice the normal "Trade" button changes to say "Swap". You may also use https://wrapeth.com/.
What is Collateral?
Collateral is an asset you will offer up as a promise for repaying your loan. You will need to provide Collateral in excess of the loan value, reclaimable when the loan is repaid.
What are the fees?
Borrowers pay a fee equal to 1% of the principal. So a loan of 10K USDT would have them paying 100 USDT in fees, in addition to the interest they owe.
What is the liquidation rate?
If the value of your collateral token decreases too much you will be faced with Liquidation, automatically closing your loan and selling your collateral to the Lender. You can reduce this by over-collateralizing your loan or by staking YLD.
What are the minimum collateral ratios?
Liquidation ratios vary depending on the type of asset you're using as collateral and depending on the volatility of the asset type (stablecoins, ETH, others). Assets like stablecoins have very low volatility, so they have the lowest minimum collateral ratios. Additionally, all ratios can be reduced by a few percentage points if you have activated YLD staking within the app. 

The minimum collateral ratios are as follows:
Stablecoins
ETH
Everything Else
125%
135%
150%
122.5% (with YLD stake)
130% (with YLD stake)
145% (with YLD stake)
Why over-collateralization?
You can over-collateralization your loan by offering more collateral than your loan is worth, re-claimable when the loan is repaid. This is used to protect lenders from market volatility.
How much YLD will I earn from repaying my loans?
After repayment, the borrower can claim ~4% worth of the interest in YLD (up to the cap which is dependent on the current market price of YLD).
How are the rates fixed?
Most DeFi lending apps use a pooled model where lenders and borrowers deposit funds into a giant pool. The rate is then some function of how much the pool is utilized which changes as people enter and leave.
There are no pools in Yield. Each loan is its own island, individualized to the lender/borrower in that specific loan contract. No other entity in the system is relevant when determining rates. They're fixed at loan creation.
Where is my YLD Reward?
Once your loan has been repaid you can Claim your reward under your Profile. YLD rewards will show up in your wallet once they have been minted.
Depending on how quickly you repaid your loan, you must wait either 10 days or 90 days to be able to claim the FULL reward as the reward 'mines' over this period. You can claim the reward anytime before it's fully mined but unless you wait the full duration, you won't get the full reward. You may only claim a reward ONCE per loan.
What happens if I don't repay on time or my collateral is seized?
If you fail to repay your loan before it's due, or your collateral is seized after it fell below the minimum principal-to-collateral ratio, you will not be eligible to mint any YLD rewards.
In the event that your collateral is seized, you will keep the principal assets that you borrowed. That loan is now complete.
Why can't I repay my loan immediately after I take it out?
There is a minimum wait period of 5 minutes before you are able to pay back your loan. Be aware of the wait period imposed on loans that are repaid unnaturally fast, however. For more details on that, please see the section below, What happens if I repay may loan before it's due?​
What stops borrowers from dumping their earned YLD on the market?
Nothing. However, as the earned amount tracks the principal and interest of the loan, smart borrowers would seek to sell what they've earned for more than they spent in fees.
What happens if I repay my loan before it's due?
While you can repay a loan at any time, repaying too early increases the time to mine the full reward from 10 days to 90 days.
Repaying a loan that has a duration of ≤ 12 days with more than 2 days left before it is due is "too early".
Repaying a loan that has a duration > 12 days means that repaying it sooner than 10 days + 25% of the loan duration has elapsed is also "too early".
Can I expect better interest rates via YLD lending?
Every activity on Yield is individualized. This means, unlike other platforms where earnings are distributed across depositors in a "pool", your earning is fully and only yours on Yield. This eliminates the problem of having to worry about fluctuating rates — which often trend to ~0% — affecting your calculations because here the rates are fixed and guaranteed.
When creating a lending offer, you can choose a guaranteed interest starting at 2% up to 12.5% interest.
Do I need to mint a new token or do my assets stay in their same format?
There is no separate token minted. The only assets involved in the loan are your collateral and the lender's principal.
What happens when Yield buys back YLD tokens with the platform fees?
100% of the fees are used to buyback YLD on the open market and burn them, permanently removing them from the circulating supply. These fees are collected over time making the burn happen periodically.
Yield's buyback and burn is important to counteract the minting of YLD when after a borrower repays their loan.