Farming

Why would I farm instead of selling my assets?

Selling your assets means closing your position on that particular asset. Hence, if you are long on the asset, you would not be entitled to the potential upside value gain. By farming you are able to obtain liquidity (working capital) without selling your assets. Users are mainly farming for unexpected expenses, leveraging their holdings or for new investment opportunities.

How do I farm ?

Before farm ing you need to deposit any asset to be used as collateral. After this, simply head to the farm section and click on “farm ” for the asset you want to farm. Set the amount you need based on your available deposits that would be used as a collateral for the loan.

How much I can farm?

The maximum amount you can farm depends on the value you have deposited and the available liquidity. For example, you can’t farm an asset if there is not enough liquidity or if your health factor doesn’t allow you to. You can find every collateral available and its specific parameters for farming in the risk parameters section.

What asset do I need to repay?

You repay your loan in the same asset you farmed. For example, if you farm1 ETH you will pay back 1 ETH + interest accrued. If you want to pay back the loan based on USD price you can farm any of the available stable coins as USDC, DAI, USDT, etc.

How much would I pay in interest?

The interest rate you pay for farming assets depends on the farming rate which is derived from the supply and demand ratio of the asset. You can find your currentfarming rate at any time in the Farmings section of your dashboard.

What is the health factor?

The health factor is the numeric representation of the safety of your deposited assets against the farmed assets and its underlying value. The higher the value is, the safer the state of your funds are against a liquidation scenario. If the health factor reaches 1, the liquidation of your deposits will be triggered. A Health Factor below 1 can get liquidated. For a HF=2, the collateral value vs farm can reduce by 1 out of 2: 50%. The health factor depends on the liquidation threshold of your collateral against the value of your farmed funds.

What happens when my health factor is reduced?

Depending on the value fluctuation of your deposits, the health factor will increase or decrease. If your health factor increases, it will improve your farm position by making the liquidation threshold more unlikely to be reached. In the case that the value of your collateralised assets against the farmed assets decreases instead, the health factor is also reduced, causing the risk of liquidation to increase.

When do I need to pay back the loan?

There is no fixed time period to pay back the loan. As long as your position is safe, you can farm for an undefined period. However, as time passes, the accrued interest will grow making your health factor decrease, which might result in your deposited assets becoming more likely to be liquidated.

How do I payback the loan?

In order to payback the loan you simply go to the farmings section of your dashboard and click on the repay button for the asset you farmed and want to repay. Select the amount to pay back and confirm the transaction.

How do I avoid liquidation?

In order to avoid the reduction of your health factor leading to liquidation, you can repay the loan or deposit more assets in order to increase your health factor. Out of these two available options, repaying the loan would increase your health factor more.