Lend/Borrow FAQs

Backpack features an omnichain money market where users can lend and borrow a variety of assets.

---

Looking for in-depth walkthroughs? Check out our Backpack Guides and Tutorials at Learn.Backpack.Exchange or our trading system docs at Guide.Backpack.Exchange.

---

How do I lend assets on Backpack Exchange?

1. Go to the Lend section at the top of your screen

2. Select the asset you wish to lend, specify the amount, and click Lend.

3. If you have Auto-Lend enabled in your settings, your assets will automatically be lent to the lending pool, maximizing your earning potential.

You can track your lending activity and accrued interest in the Lend & Borrow Info panel.

How do I borrow assets on Backpack Exchange?

1. Ensure you have sufficient collateral in your account.

2. Navigate to the Lend section and switch to the Borrow tab.

3. Choose the asset you want to borrow, enter the desired amount, and confirm the transaction.

Interest will accrue continuously on the borrowed amount, and you can view the details in the Borrow Info panel.

How are interest rates calculated for lending and borrowing?

Interest rates on Backpack Exchange are determined dynamically based on the utilization rate of the asset pool. Higher utilization rates lead to higher interest rates, making lending more profitable and borrowing more expensive.

The rates are displayed in real-time within the Lend & Borrow Info section, so you can stay informed of any changes.

What are the risks associated with lending and borrowing on Backpack Exchange?

For Lenders

• The main risk is that market conditions or utilization rates may change, potentially affecting the yield on your lent assets.

For Borrowers:

• The value of your collateral could decrease, resulting in a lower margin level and the risk of liquidation. Additionally, fluctuating interest rates can impact the cost of borrowing. ‍

It’s crucial to understand these risks and manage your positions accordingly.

How does the repayment process work in the borrowing market?

To repay your borrowed assets:

1. Go to the Lend section and switch to the Borrow tab.

2. Select the asset you wish to repay, enter the repayment amount, and confirm the transaction.

You can also enable Auto Lend, which will automatically use available balances to repay loans when possible.

Can I withdraw my collateral while I have an open borrow position?

Yes, you can withdraw a portion of your collateral, provided that doing so doesn’t lower your margin level below the required thresholds. If withdrawing collateral would put your account at risk of liquidation, the system will prevent the withdrawal.

Always check your margin level before attempting to withdraw.

How can I earn interest on my assets?

To earn interest, simply lend your assets through the Lend section.

If you have Auto-Lend enabled in your settings, your assets will automatically be lent to the lending pool, ensuring you continuously earn interest. Check the current APY and other details in the Lend & Borrow Info panel.

What happens if the value of my collateral drops while I have an open borrow position?

If the value of your collateral decreases significantly, your margin level will also drop. If it falls below the Maintenance Margin Fraction, your positions will be at risk of liquidation.

The system will automatically sell off your collateral to repay the borrowed funds and apply a liquidation penalty.

To prevent this, monitor your margin level and add more collateral if needed.

How does the liquidation process work for borrowed funds?

If your Account Margin Factor falls below the required Maintenance Margin Fraction, the liquidation engine will begin selling your collateral to cover the borrowed amount. All positions will be reduced in an orderly manner to protect both you and the platform.

A penalty fee will be applied, and the remaining collateral will be returned to your account.

Can I opt out of using specific assets as collateral?

On Backpack Exchange, your account operates on a cross-margin basis, meaning all eligible assets are used as collateral by default. There is no option to disable or opt out of using specific assets as collateral within the same account.

The only way to prevent an asset from being used as collateral is to move it to a sub-account, isolating it from your main account’s margin positions.

How do I view my lend and borrow activity?

You can view your lend and borrow activity in the Lend & Borrow Info section. Here, you’ll see details such as the total amount lent or borrowed, current interest rates, and accrued interest.

Use this dashboard to manage your lending and borrowing strategies effectively.

What are the benefits of lending assets on Backpack Exchange?

Lending assets on Backpack Exchange allows you to earn passive income with minimal effort. If you enable Auto-Lend, your assets will be continuously lent, ensuring they generate interest whenever available.

The interest accrues over time and compounds, making it an efficient way to put your idle assets to work.

Can I use borrowed funds for trading on Backpack Exchange?

Yes, you can use borrowed funds for both spot and margin trading. This feature provides extra capital to take advantage of market opportunities.

However, using leverage increases your risk, so it’s important to manage your collateral carefully and monitor your margin level to avoid liquidation.

How do I check the utilization rate of a lending pool?

The utilization rate of a lending pool is displayed in the Lend & Borrow Info section. It represents the ratio of total assets borrowed to the total available assets in the pool. A higher utilization rate typically results in higher interest rates for lenders and higher borrowing costs for borrowers.

---

Didn't find what you needed here? Check out our in-depth Backpack Guides and Tutorials at Learn.Backpack.Exchange or our trading system docs at Guide.Backpack.Exchange.