Borrowing
Why Choose Fluid for Borrowing?
Fluid's innovative approach to borrowing stands out in the Sei DeFi ecosystem. Our platform is designed to provide interest-free loans, ensuring greater capital efficiency compared to traditional borrowing systems. This means you need less collateral for the same loan amount, enhancing your financial flexibility. For instance, users looking to speculate on future Sei price movements can leverage their Sei positions significantly, intensifying their exposure to market fluctuations.
Understanding Collateral in Fluid
Collateral in Fluid is any asset that a borrower pledges to secure a loan. Initially, our platform supports Sei as collateral, with plans to expand to a broader range of assets. This approach ensures your assets are not just idle holdings but active participants in your financial strategies.
The Uniqueness of Interest-Free Borrowing
Fluid's interest-free borrowing model is supported by a well-thought-out economic design:
Capital Efficiency: Our protocol's efficient design means you can borrow more with less collateral, maximising your financial power.
Dynamic One-Time Fees: To balance the absence of interest, Fluid charges dynamic one-time fees for borrowing and redemption. These fees adjust based on market conditions, such as the redemption rate, ensuring system stability and fairness.
How to Borrow with Fluid
Open a Vault: Start by opening a Fluid Vault and depositing Sei as collateral.
Draw Funds: You can then draw Sai, our stablecoin, against your collateral. The maximum amount is determined by your collateral value and the platform's minimum collateral ratio.
Flexible Repayment: Repay your loan according to your convenience, as long as you maintain the required collateral ratio.
Fees for Borrowers
Fluid's transparent fee structure includes:
One-Off Borrowing Fee: Charged on the amount drawn and added to your debt.
Market-Driven Redemption Costs: If Sai's market price fluctuates, it may affect the cost of loan repayment. However, this can be managed by timely repayment or maintaining Sai reserves.
Collateral Ratio and Liquidation
Collateral Ratio: The ratio of your Sei collateral's value to your Sai debt. It's vital to maintain this ratio above the minimum threshold to avoid liquidation.
Liquidation Process: If your Vault falls below the minimum collateral ratio, it may be subject to liquidation, resulting in a loss of collateral.
The Fluid Vault
What is a Fluid Vault? A Vault in Fluid is where you manage your loan, similar to Troves in Liquity. It holds your Sei collateral and your Sai debt.
Managing Your Vault: You can adjust your Vault's balance by adding collateral or repaying debt. This flexibility allows you to respond to market changes effectively.
The Fluid Leverage Advantage
Maximising Leverage: With Fluid, you can leverage your Sei holdings by borrowing Sai, converting it to Sei, and adding it back as collateral. This process can be repeated to amplify your market exposure.
Safeguards and Guidance: While leverage can enhance returns, it also increases risk. Fluid provides tools and guidance to help users make informed decisions.
Future Developments and Partnerships
Stay tuned for upcoming announcements on new collateral types, partnerships, and innovative features that will further enrich your borrowing experience with Fluid.
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