> ## Documentation Index
> Fetch the complete documentation index at: https://docs.dyxy.io/llms.txt
> Use this file to discover all available pages before exploring further.

# Borrowing

> Deposit collateral and borrow against it without selling your assets.

A collateral loan lets you get liquidity without selling what you hold. You deposit an asset as collateral, for example ETH, and borrow another asset against it, for example USDC. As long as your collateral stays above the required level, you can keep the loan open for as long as you like.

## Why borrow

* **Keep your exposure.** Get stablecoins for spending or trading while staying exposed to your ETH, SOL or BTC.
* **Avoid a taxable sale**, in jurisdictions where selling would be one.
* **Leverage.** Borrow stablecoins, buy more of the collateral asset, and increase your exposure. This also increases your risk.

## Key terms

| Term | Meaning |
| - | - |
| **LTV (loan-to-value)** | Your debt divided by your collateral value. Borrowing $6,000 against $10,000 of collateral is 60% LTV |
| **Max LTV** | The highest LTV you can borrow up to in that market |
| **Liquidation threshold** | The LTV at which your loan can be liquidated. On Morpho, this is called LLTV |
| **Health factor** | How far your loan is from liquidation. Above 1 is safe, at 1 or below the loan can be liquidated. See [Health factor](https://docs.dyxy.io/earn/lend/health-factor.md) |
| **Borrow APY** | The variable interest rate on your debt |
| **Liquidation penalty** | The extra collateral taken from you when a loan is liquidated |

## Borrow

**1. Open Collateral Loans**

Go to **Earn → Lend** and open the **Collateral Loans** tab.

**2. Choose a market**

Pick the pair of collateral and borrow asset. Compare the borrow APY, max LTV and liquidation threshold.

**3. Deposit collateral**

Enter the amount of collateral and confirm.

**4. Choose how much to borrow**

Enter an amount, or use the slider. DYXY updates your LTV, health factor and liquidation price as you move it.

**5. Confirm**

Sign the transaction. The borrowed asset arrives in your wallet.

## Example

You deposit 5 ETH at $4,000, so $20,000 of collateral. The market has an 80% max LTV and an 85% liquidation threshold.

| Borrowed | LTV | Liquidation price of ETH |
| - | - | - |
| \$6,000 USDC | 30% | about \$1,412 |
| \$10,000 USDC | 50% | about \$2,353 |
| \$16,000 USDC | 80% | about \$3,765 |

Borrowing at the maximum leaves only a 6% drop before liquidation. A conservative LTV gives your loan room to survive normal volatility.

## Repay and withdraw

* **Repay** part or all of the debt at any time. There is no fixed term and no early repayment fee. Interest keeps accruing until you repay.
* **Withdraw collateral** after repaying, or partially while the loan is open, as long as your health factor stays above 1.

> [!WARNING]
>
> Your debt grows with interest even when prices don't move. A loan left untouched for a long time slowly drifts toward the liquidation threshold.


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