Collateral, borrowing, and health

A Black Market Lending account can supply supported assets, enable eligible supply as collateral, borrow enabled assets, repay debt, and withdraw assets when its health and market liquidity allow it.

Signing and token permissions

Changing a lending position requires a wallet signature. Before a supported token can be moved into or used to repay a lending position, its holder may need to grant a separate token-spending authorization, often called an approval. That authorization and the later lending action are distinct decisions, so review the network, destination, and amount shown by the wallet.

Supplying

Supplying places an asset in its lending market and creates a supply position. Supplied balances may earn variable interest based on utilization and the market's interest-rate strategy.

Supply is limited by the market's supply cap and current state. A supplied balance does not guarantee an immediate withdrawal: available liquidity can be lower when other accounts have borrowed the asset.

Supplying an asset does not automatically make it collateral. Some assets can be supplied but cannot support debt.

Collateral and health

Eligible supplied assets can be enabled as collateral. Each asset has a loan-to-value ratio for initial borrowing power and a separate liquidation threshold for determining how much protection it provides against liquidation.

The health factor is total risk-adjusted collateral value divided by total debt value. It falls when collateral loses value, debt gains value, interest accrues, or collateral is disabled or withdrawn. When it reaches the market's liquidation condition, the account can be liquidated under that market's rules.

Maintaining room above the liquidation condition gives a position more tolerance for price moves and interest accrual. It is not a guarantee against liquidation.

Borrowing, repaying, and withdrawing

A borrow creates debt and transfers an available asset to the borrower. It is subject to the asset's borrowing availability and cap, available liquidity, collateral settings, borrowing power, and the account's resulting health.

Debt accrues interest according to the market's rate strategy. Repaying reduces debt and normally improves health, but the amount owed can change as interest accrues.

Withdrawing supply or disabling collateral reduces protection for existing debt. The protocol can reject actions that would leave an account below its required health, and withdrawals remain subject to available market liquidity.

Position discipline

Borrowers should monitor debt, accrued interest, enabled collateral, prices, changing market settings, and liquidity rather than treating the liquidation condition as a target. Suppliers should weigh yield against utilization and withdrawal liquidity. See Pricing and liquidation for the risks that can rapidly change a position's outcome.