For borrowers

Borrowing on Tectonic, the careful way

Borrowing lets you raise liquidity without selling. Done conservatively it is a useful tool; done carelessly it is how people get liquidated. This guide is about staying firmly in the first camp.

Why borrow at all?

The appeal is simple: you keep assets you believe in while still freeing up cash. Common reasons include covering an expense without selling (and without triggering a taxable disposal in some jurisdictions), accessing stablecoins for a strategy, or maintaining exposure to CRO while putting borrowed funds to work. None of these remove risk — they reshape it.

Borrowing power and collateral factors

Your borrowing power is the sum of each collateral's value multiplied by its collateral factor. Stablecoins carry high factors because their price is steady; volatile assets carry lower ones. As a reference point, CRO has historically sat around a 50% factor — so $1,000 of CRO collateral provides roughly $500 of borrowing power. The exact figures for every market are set by governance and listed in the official documentation; treat the numbers here as illustrative.

The health factor is the number that matters

Most borrowers track a single figure — often shown as a health factor or a borrow-limit-used percentage. It compares your debt (with accrued interest) to the liquidation threshold of your collateral. As long as you stay comfortably below the limit, you are fine. Three things quietly push you toward the edge:

• Your collateral falls in price.
• The asset you borrowed rises in price.
• Interest accrues on your debt while you do nothing.

That third one catches people: a position that looked safe can drift into danger purely from interest over weeks of inattention.

What it costs

You pay the market's borrow APY, which — like the supply rate — floats with utilisation and updates every block. There is no fixed term and no minimum repayment schedule; interest simply compounds onto your debt until you repay. If TONIC borrow incentives are active, they can offset part of that cost, but never assume an incentive will outlast your loan.

Repaying

Repay any amount, any time, in the borrowed asset. Each repayment lowers your debt and lifts your health factor; once the debt is cleared you can withdraw your collateral freely. Many cautious borrowers repay proactively whenever their collateral dips, rather than waiting to see whether it recovers.

A short checklist to avoid liquidation

• Borrow well under your limit — many users stay below 50% of borrowing power.
• Prefer stable collateral if you want a calmer position; volatile collateral magnifies swings.
• Set yourself reminders to check the position; debt grows silently.
• Keep a little of the borrowed asset spare so you can repay quickly in a downturn.
• Understand exactly what happens at the threshold — read understanding liquidations.