Borrowing

How are borrow rates determined?

Variable interest rates paid by borrowers are a function of market utilization. As the utilization of a market (i.e. borrows relative to deposits) increases, the interest rate charged to borrowers increases. As the utilization of a market decreases, the interest rate charged to borrowers decreases.

Stable interest rates paid by borrowers will remain constant unless the average borrow rate is lower than 25% APY and the utilization rate is over 95%. At which time, the borrowers interest rate will reset to the current market rate which could be substantially higher.

Can I borrow using a stable and variable interest rate at the same time for one asset?

No, you can only either borrow using a stable or variable rate for an asset. You can have different borrow interest rates for different assets.

Can I add more collateral to raise my Health Factor back up to prevent being liquidated?

Yes, you can make a deposit to raise your Health Factor.

How do I know how much interest I’m paying?

In your ‘Account’ tab, tap on the borrowed asset to see your interest rate, borrowed amount, and total debt.

Why would I borrow instead of selling my assets?

Selling your asset means closing your position in that asset. If you are long on that asset, meaning you believe that the price will go up, and you sell the asset then you would not see the potential upside. By borrowing against the asset, you unlock liquidity or working capital without incurring the potential opportunity cost of selling.

How do I borrow?

To borrow, first deposit collateral which can be CELO, cUSD, or cEUR. All deposits into Moola are considered collateral and earn compound interest at the market interest rate. Tap menu, tap the asset you want to borrow, type in the amount or use the slider bar, tap borrow, confirm the transaction in your wallet, input your PIN if prompted. You will be redirected back app.moola.market and will see a confirmation message and link to view the transaction on explorer.celo.org.

Who can borrow?

Any address on the Celo network that has deposited collateral into Moola can borrow against their collateral.

How much can I borrow?

You can borrow a maximum loan-to-value amount of 75%.

How is loan-to-value (LTV) calculated?

LTV = Total Debt / Collateral Value

What is the maximum Loan-to-Value (LTV) ratio?

The maximum LTV ratio defines the maximum amount of currency that can be borrowed with a specific collateral. Maximum LTV is expressed as a percentage. For example, a Maximum LTV of 75% means that for every 1 CELO worth of collateral, borrowers will be able to borrow 0.75 CELO worth of another currency. Once a loan is taken, the LTV evolves with market conditions.

What asset do I need to repay?

You need to repay the same asset you borrowed. For example, if you borrow 1 CELO then you need to repay 1 CELO plus interest.

I made a repayment. Why didn’t my principal amount owed go down?

When you repay a Moola loan, the loan origination fee is repaid first. Once the loan origination fee is repaid, then your repayment goes towards paying down your principal plus interest.

What is the difference between variable and stable interest rates?

Variable interest rates can change from block to block and are determined by the utilization of an asset pool. Stable interest rates are intended to not change in the short term but could reset under certain market conditions.

When could my stable rate be reset?

Your stable rate could reset if the average borrow rate is lower than 25% APY and the utilization rate is over 95%.

How do I switch my interest rate type?

This is not currently possible.

What is the Health Factor?

The Health Factor is a numeric representation of the safety of your deposited assets relative to your borrowed assets. The higher the Health Factor is, the safer your deposited funds are against a liquidation scenario. If your Health Factor reaches 1, the liquidation of your deposits will be triggered. 


Health Factor = (Total Collateral * Liquidation Threshold) / Total Debt

How can I track my Health Factor?

You can view your Health Factor by connecting your wallet address at app.moola.market. You can also track your Health Factor using the @MoolaMarketBot on Telegram. Get started by adding the wallet addresses and Health Factor thresholds you would like for the bot to monitor. It can watch as many addresses as you want. To add monitor request, use:

/add WALLET_ADDRESS HEALTH_FACTOR

For Example: If you want to be notified when the Health Factor of wallet address 0xe4c183d99b463cc2190b737b51ae26cc6f17ed62 drops below 1.25 then you would type

/add 0xe4c183d99b463cc2190b737b51ae26cc6f17ed62 1.25

You can add multiple monitor requests using the same process shown above.

For help, type /help to get a list of Frequently Asked Questions.

What is the liquidation threshold?

The Liquidation Threshold is the percentage at which a loan is defined as undercollateralized. A liquidation threshold of 80% means that if your Loan-To-Value ratio goes above 80%, then your loan is undercollateralized and some of your collateral can be liquidated. The delta between the Maximum Loan-To-Value (75%) and the Liquidation Threshold (80%) is a safety cushion for borrowers. The current liquidation threshold for all markets is 80%.

What impacts my Health Factor?

The value of your deposits will impact your Health Factor. If the value of your deposits increases relative to your borrowed assets, then your Health Factor will increase indicating that a liquidation is less likely. If the value of your deposits decrease relative to your borrowed assets, then your Health Factor will decrease indicating that a liquidation is more likely. Depositing additional collateral will increase your Health Factor while withdrawing collateral will decrease your Health Factor. Repaying some of your debt will increase your Health Factor while borrowing additional assets will decrease your Health Factor.

When do I need to pay back the loan?

There is no pre-defined time period in which you need to pay back the loan. As long as the value of your deposited assets stays above the liquidation threshold, you can borrow for an undefined period of time. However, as time passes, interest owed will continue to accumulate and may decrease your Health Factor to a point where your collateral is at risk of liquidation.

How do I pay back the loan?

Connect your wallet, tap ‘Repay’, select the currency from the picker menu, input the amount to repay, tap next to verify the information is correct, Confirm the transaction in your wallet.

How do I avoid liquidation?

You can avoid liquidation by keeping your Health Factor above 1. Depositing additional collateral, repaying some or all of your loan, and an increase in the market price of your collateral all increase your Health Factor and reduce the likelihood of a liquidation.