Borrow
After adding liquidity to the pool, Uniswap creates a unique NFT to represent your contribution. You can track your position in the "Eligible LP Position" section, but make sure both tokens you deposited are listed as "Eligible" first.
Once you've selected your position from the list, you'll be taken to a dedicated page that shows all the details of your liquidity pool contribution. From there, click the "Borrow" button to access the borrowing interface. Here you can borrow against your LP position at 4% interest rate per annum.
Now the question arise how much you can borrow for your liquidity?
The answer is Collateral Ratio , The Collateral Ratio is a measure used to determine the percentage of amount they wish to borrow relative to the borrower’s total value of collateral . It’s calculated using the following formula:
Collateral Ratio = (Total Borrowed Value / Total Collateral Value) * 100%
For instance, if you wish to borrow 1000 USD worth of a particular token, you might need to deposit collateral worth 2000 USD, resulting in a Collateral Ratio of 50%.
Collateral ratio for LP position will be determined by taking minimum of collateral ratio set for each token of LP position.
For example, In a USDC-ETH LP position, if USDC collateral ratio is 90% and ETH collateral ratio is 80%. Collateral ratio for ETH-USDC LP position will be 80%.
Input the amount you'd like to borrow and grant Chad Finance permission to use your NFT position as collateral. (When you borrow CUSD, your NFT position is securely transferred to a vault contract to back the loan. You can withdraw it anytime by repaying the loan.) Once you confirm by clicking "Borrow," the CUSD will be deposited directly into your wallet.
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