Abracadabra provides isolated lending markets that allow you to borrow against various forms of collateral. To learn more about isolated lending markets and the Kashi technology that powers the magic of Abracadabra, please refer to the Kashi documentation.
Once on the Borrow page, you will be able to select token collateral to deposit into the isolated lending market by clicking on the highlighted frame.
Once selected, you will see various tokens that are able to be used as collateral to be borrowed against.
Clicking on the collateral will select the appropriate market.
In this example, we are going to deposit xSUSHI tokens as collateral and borrow MIM against those tokens.
First, you can decide how much xSUSHI will be deposited as collateral. Next, you decide how much MIM will be borrowed against that collateral by either typing an amount into the input labeled "MIM to Borrow" or by using the LTV percentage buttons immediately below.
Once you have selected your parameters, the box on the right will show you what your borrow position will look like, after the transaction is successfully completed.
- Collateral Deposited: Amount of collateral into the position.
- Collateral Value: Current dollar value of the collateral deposited.
- MIM Borrowed: Total amount of MIM that will be borrowed after the position is opened.
- Liquidation Price: Collateral price at which your borrow position will be liquidated.
The liquidation price that is shown will always refer to the collateral that has been deposited to borrow MIM. A liquidation price of $1.1252 means that if the price of xSUSHI drops to $1.1252, your position is at risk of being liquidated. Please refer to the "Liquidations" section of the docs to learn more.
The box underneath the Approve and Borrow buttons show the lending market's parameters. These parameters are specific to the collateral that is being deposited.
- Maximum collateral ratio: Maximum collateral ratio (MCR) represents the maximum amount of debt a user can borrow against the current value of the collateral token. For instance, if you are depositing $100 of collateral and the MCR is 85%, then you can borrow up to 85 MIM.
- Liquidation fee: Liquidation fee represents the discount that a liquidator will receive when repaying open borrow positions that are flagged for liquidation.
- Borrow fee: Borrow fee is a fee that is charged on the amount of MIM that you borrow. For example, if you borrow 100 MIM on a market with a 1% borrow fee, you will owe 1 MIM in addition to the 100 MIM you borrowed. Your outstanding debt will therefore be 101 MIM.
- Interest: Interest is the annualized rate that your debt will increase by each year.
- Price: Current price of the collateral selected.
When you are finally ready to open a position, simply click on the "Add collateral and borrow" button.
Note that if this is your first time using Abracadabra, you may need to grant several approvals before you can open the position.
Click this button will deposit the collateral in your wallet and place them into a contract. The borrowed MIM will then magically appear in your wallet. You may need to add the MIM token address to your wallet in order to see them.
Once the transaction is confirmed, you will receive a pop up that redirects you to the "Positions" Page where you will be able to repay or close your position.
In order to close your position, head over to the Position page, and click on the "Repay MIMs" button.
Once there, you will be able to repay your MIMs and remove your collateral. Be sure not to remove collateral before repaying as this will lower your liquidation price.