Borrow
How does borrowing work?
Borrowers must deposit collateral assets with a value greater than the amount they wish to borrow. The borrower can borrow up to the market's liquidation LTV. If at any time the borrower breaches the liquidation LTV, they can be liquidated by third-party liquidators on the Morpho protocol. At maturity, the borrowed amount plus interest must be repaid either by repaying the debt directly or by renewing the position into a longer-dated maturity on Morpho V2 or an open-term position on Morpho V1.
What can I borrow?
Tenor enables users to borrow stablecoins and WETH against collateral assets such as tokenized versions of ETH and BTC. Users can also borrow currencies such as stablecoins and ETH against long-tail assets using OTC offers.
How much can I borrow?
Each market has a specific and fixed Liquidation Loan-To-Value (LLTV) parameters. It is minimum value of collateral required relative to the borrowed currencies. For example, if this ratio is 90%, the value of borrowed currencies must not exceed 90% of the value of the collateral, or the position is eligible for liquidation.
The amount you can borrow is therefore directly linked to the value of your collateral and the LLTV of the market. It is also dependent on the amount of liquidity available in the market.
What is the cost of borrowing?
Interest is paid at the fixed rate agreed upon when the position is initiated. The rate remains unchanged until maturity. If a position is closed early the borrower must repay the interest for the whole term. Note that if the market is liquid, the borrower can close their borrow at the market rate and potentially avoid repaying the interest for the whole term.
Does Tenor charge any fees?
No. Tenor does not charge any additional platform fees for borrowing. However, future fees may be introduced for advanced features or integrations, with prior notice provided.
Does my collateral earn any interest?
No. Collateral currencies do not earn interest as they are not lent out to borrowers.
What happens at maturity?
At maturity, the borrower must repay the borrowed amount plus interest. If the borrower cannot repay the debt, they can be liquidated by third-party liquidators on the Morpho protocol.
Can I renew my position?
Yes. Tenor provides an auto-renewal feature that automatically renews a borrow position before maturity into a longer-dated fixed-term position on Morpho V2 or into an open-term position on Morpho V1. This feature eliminates the need for user intervention before maturity and minimizes the risk of liquidation at maturity.
Can I get liquidated?
Yes. If the borrower's collateral value falls below the Liquidation Loan-To-Value (LLTV) of the market, they can be liquidated by third-party liquidators on the Morpho protocol. Learn more about liquidations.