To borrow USDi from the protocol:
- Have a balance of a supported collateral asset in your wallet.
- Go to Interest Protocol's interface and connect your wallet.
- If it is your first time borrowing, you will be prompted to mint your vault.
- Deposit collateral into your vault.
- Borrow USDi.
To borrow from Interest Protocol, users must open a vault. Vaults are smart contracts that are the conduit between the vault owner and the protocol. Each vault has a unique ID and is owned by its creator. Once minted, vaults exist forever. The borrower can deposit supported collateral to the vault through the interface or by transferring assets to their vault address.
Note: Only send ERC20 supported tokens to a vault. Do not send native ETH to a vault. Only wETH is supported.
A vault's borrowing power equals the sum of collateral values discounted by each collateral's LTV. A user can borrow USDi from their vault up to the vault's borrowing power.
Upon a borrow transaction, USDi is transferred to the vault owner, and interest begins to accrue. Interest Protocol charges a variable rate that depends on the protocol's reserve ratio.
Note: If at any time the vault's borrowing power is less than the vault's outstanding balance of USDi loan, the vault is eligible for liquidation.
Note: Your loan will start accruing interest immediately after you borrow. If you borrow exactly up to your borrowing power, your vault will be eligible for liquidation after the next rebase, which can sometimes take place in the same block as your borrow transaction.
At any time, the vault owner can deposit additional collateral assets to their vault, borrow more USDi, or repay their loan.
On the Interest Protocol site, the user experience for Capped Collaterals is almost identical to regular collaterals. The exception is that Capped Collaterals require a new sub-vault (to support the additional functionality) and approval by the vault owner for the capped token contract to transfer the underlying tokens from their wallet. Every Interest Protocol user must have a vault. Users depositing Capped Collaterals, such as MATIC, also need to create a sub-vault (voting vault) that manages the underlying assets of the capped tokens. Deposits of underlying assets are held in the sub-vault (voting vault) and can be withdrawn like any other collateral asset in the protocol. The Capped Collateral system is compatible with governance tokens. Governance tokens in the sub-vault (voting vault) can delegate their voting power to any address.
An example of Capped Collaterals with MATIC (assuming you completed the steps at the top)
- Have a balance of MATIC in your wallet.
- Deposit MATIC
- Assuming it is your first time using a Capped Collateral, the interface will prompt you to approve a transaction to create the sub-vault. Note: this is a one-time cost for all Capped Collaterals.
- Once the sub-vault is created, you'll be prompted to approve the cMATIC contract to transfer your MATIC from your wallet. Note: this is a one-time cost for MATIC.
- After the approval, you'll be able to deposit MATIC. The MATIC will transfer from your wallet to your sub-vault. cMATIC (capped MATIC) will be minted and transferred to your main vault. Once the cMATIC makes it to your main vault, your vault borrowing power will increase.
- You can withdraw MATIC at any time. One transaction will burn the cMATIC in the sub-vault and return MATIC to the vault owner.
Voting with Collateral
Governance tokens deposited as collateral retain their voting power through delegation. For example, UNI holders can open a vault, deposit UNI, borrow USDi, and delegate their voting power to an address of their choice. Governance token holders no longer need to choose between borrowing and governance participation.
To delegate the vault's voting power, look for the
delegate button on the frontend and enter the address to delegate voting power to.
More information on borrowing available here.