Borrowing
Holders can borrow USDG against eToken collateral without selling: deposit eTokens, draw stablecoins, stay long. This is the trade that lets a stock position fund other activity, and looped, it produces leveraged exposure.
Parameters
| Parameter | Value |
|---|---|
| Target loan-to-value | 70% |
| Liquidation threshold | 80% |
| Liquidation bonus | 5% |
| Health factor | (collateral value × 80%) / debt; below 1.0 anyone may liquidate |
| Vault-wide lending cap | 35% of vault collateral |
| Max loop leverage | ~3.3× at 70% LTV |
The borrow rate
The rate has two parts:
| Part | Source | Level |
|---|---|---|
| Base rate | External credit line (Aave-style pool), passed through at cost, floored | Market-driven |
| Premium | Own's two-slope curve on lending utilization | Base 6%; +2% slope to the 80% kink (8% at optimal); +72% slope above the kink |
Below the kink, borrowing stays cheap so the book fills; above it, the rate spikes to force deleveraging before the book exhausts. The premium flows to the Vault Manager and on to LPs (with a 10% treasury cut); the base rate goes to the external credit line at cost.
Liquidation
Borrow positions (unlike plain eToken holdings) are margin positions and can be liquidated. When the health factor drops below 1.0, a liquidator repays debt and receives collateral worth the repayment plus 5%. Dividends on eTokens locked as borrow collateral accrue to the lending vault while the loan is open.
Relationship to eUSD
Borrowing USDG against eTokens and minting eUSD against eSPY are parallel credit systems with different trade-offs: borrowing gives USDG at a floating rate against any supported eToken; eUSD gives a fixed 2%/yr cost against eSPY specifically, plus participation in the sEUSD yield loop.