Borrowing
Last updated
Last updated
Backpack offers the ability for you to borrow assets for a variety of use cases, such as spot margin trading. Borrowed assets go into your available balance, which can be used to place orders or make withdrawals as long as the margin requirements are met.
Contrary to most Borrow Lend protocols/products, you don’t need to supply assets into the lending pool before being able to borrow on Backpack. As long as there is Available Equity in the subaccount, users can start borrowing.
Here are the three different ways to borrow on Backpack.
Borrows can be originated manually through the Borrow tab on the Lend page.
Note that the Auto Lend setting automatically repays all borrows in a subaccount. As a result, manual borrowing is disabled when Auto Lend is enabled, since any manual borrows would be immediately repaid. When Auto Lend is enabled, borrows can only be made through Spot Margin or Margin Withdrawals.
You can automatically borrow through spot margin by checking the Margin checkbox on the order entry user interface and spending more than what they currently have or selling an asset that they don’t hold. For example, if you hold USDC and wants to short sell ETH spot, you can simply enable Margin and sell ETH. This will trigger a borrow for you, removing the need for making a manual borrow beforehand in order to trade with it.
Similarly, you can borrow against your collateral when withdrawing an asset that you currently don’t hold by checking the Margin checkbox on the withdrawal modal. The maximum withdrawable amount with borrow will be determined by your current Available Equity.
Borrows can be repaid in the following ways:
If you hold the asset you owe, you can manually repay it on the Borrow tab on the trade page by clicking Repay, or through the Repay tab on the Lend page. As explained previously, note that if Auto Lend is enabled, you won’t be able to make manual repayments as any borrows will be repaid automatically if there is an available balance to do so.
The proceeds of a spot margin trade can be used to repay borrows. For example, assuming you owe 1 SOL, if they buy 1 SOL with Margin enabled on the trade, that SOL will be automatically used to repay the outstanding borrow.
When Auto Lend is enabled, all borrows are repaid automatically as soon as there is available balance in the account. That means that if you owe 1 SOL, you can simply deposit 1 SOL into the subaccount and the debt will be repaid automatically.