⚙️Borrow Factor

Borrow Factor (BF) is used to indicate the borrowable amount of an asset based on the value of its collateral. A higher borrow factor indicates a higher perceived risk of the asset, which consequently reduces the amount that can be borrowed. The borrow factor is set based on factors such as the asset's market liquidity, risk level, and other relevant characteristics.

Formula:

\text{Borrow Capacity}=\frac{\text{∑(Collateral Amount} \times \text{Collateral LTV)}}{\text{Borrow Factor}}

Asset Borrow Factor Rating:

Asset	Borrow Factor (BF)
ETH	1
SOL	1
USDC	1
USDT	1
BONK	2

Example

Assume a collateral value of $100 in SOL, borrowing ETH or BONK, with a LTV of 75% for SOL.

Borrow ETH:

$\text{Borrow Capacity}=\frac{100 \times 75\%}{1}=75$

Assume borrowing BONK:

$\text{Borrow Capacity}=\frac{100 \times 75\%}{2}=37.5$