Borrow & Repayments
Borrowing
MemeLend enables users to borrow by leveraging their deposited assets as collateral. Here's how it works:
Collateral Requirement
To borrow, you must first supply assets and enable them as collateral. Only assets marked as collateral contribute to your borrowing power.
Borrowing Capacity (User-Level)
The amount you can borrow depends on:
The value of your collateral
The collateral factor assigned to each asset (how much borrowing power it provides)
Borrow Cap (Protocol-Level)
Each asset has a borrow cap, a protocol-wide limit on how much can be borrowed. This helps control risk and maintain liquidity.
Variable Interest Rates
Borrowers pay a floating interest rate, which adjusts dynamically based on supply and demand (the utilization rate of the asset).
Health Factor
The Health Factor indicates the relative safety of your borrowing position. It’s calculated based on:
The value of your enabled collateral
The borrowed amount, including accrued interest
The liquidation threshold of the collateral assets
To avoid liquidation, your Health Factor must be maintained above 1.0. A lower health factor increases the risk of partial or full liquidation.
A Health Factor > 1.0 means your position is safe. A Health Factor < 1.0 makes your position eligible for liquidation.
Repayments
MemeLend offers a flexible and transparent repayment process for borrowers:
Partial or Full Repayment
You can repay any portion of your borrowed amount at any time — there are no fixed terms.
Interest Accrual
Interest accrues continuously based on the variable rate, meaning your outstanding debt increases over time until repaid.
Same-Asset Repayment
Repayments must be made in the same asset you borrowed, including accrued interest.
Collateral Release
Once your debt is repaid, any unused collateral becomes available for withdrawal—provided it's not securing other loans.
Interest Rate Model
The Dual Curve System
MemeLend uses a Dual Curve Interest Rate Model to dynamically adjust borrowing rates based on asset utilization. This model is designed to balance capital efficiency and risk management.
Optimal Utilization Rate
A target utilization point where capital is efficiently used without compromising liquidity. This rate is set individually for each asset.
Two Interest Rate Curves
First Curve (Up to Optimal Utilization)
Second Curve (Beyond Optimal Utilization)
Below Optimal Rate
Gradual increase
Encourage borrowing while liquidity is ample
Above Optimal Rate
Sharp increase
Prevent liquidity exhaustion & reduce risk
Dynamic Adjustment
Rates automatically adjust in real time based on each asset’s utilization rate.
Asset-Specific Parameters
Each asset has custom parameters, such as optimal utilization point and curve steepness, tailored to its volatility, liquidity, and market behavior.
Why It Matters
Encouraging Liquidity
Higher utilization leads to higher yields for suppliers.
Mitigating Risk
Sharp rate increases beyond optimal levels help prevent liquidity shortages and protect the protocol.
Note: Understanding this model can help you optimize borrowing and supplying strategies based on real-time market conditions.
Final Reminder
Borrowing in DeFi involves inherent risk. Always monitor your Health Factor, maintain safe collateral ratios, and stay informed about market changes to avoid liquidation.
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