F
F
FAQ
Search…
Borrower LP Positions
The Borrower LP Position enables you to earn fees in exchange for borrowing from the Lending protocol. This position is seen as a Liability or Short position for which you must post adequate collateral. At the same rate, this enables you to earn interest-like income on otherwise latent assets.

Trade Mechanics

The position works along a similar concept as Uniswap's concentrated liquidity. That is, you select a Principal or Trade Amount, and a desired lower + upper range (i.e. tick values) for which that Principal Amount will be switched into or out of Borrowing positions.
Note that the Positions size or Notional Amount will be different from the amount of collateral posted. That is, a $100 position may require that you have $133 (or more) collateral placed in this account. Please ensure you have enough collateral to avoid liquidations.
For example, let's assume:
  • Notional Amount: $100
  • Collateral Requirements: $133
  • Reference Rate: 4%
  • Range: 1-4% (where the upper bound = the current Ref Rate)
If the Reference Rate moves within the range of 1-4%, then the Borrower LP will receive a share of protocol fees in proportion to the total Borrower LP positions within that range.

Unwinding Positions

At any time, the underlying position for the Borrower LP position (using the example above) is one of:
  • Ref Rate > 4%: 0% Borrowing
  • Ref Rate < 1%: 100% Borrowing
  • 1% < Ref Rate < 4%: 0% to 100% of Principal is Lent Out
When you unwind your position, you will receive one of the above three depending on the underlying position. Your position will not 'reset' to the original $0 borrowing cash position unless the Ref Rate is above your upper bound, or you have performed additional steps to unwind the underlying positions.
Be sure to Read our primer on Borrower LP Position Risks (coming soon)
Copy link
On this page
Trade Mechanics
Unwinding Positions