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# Borrowing

Borrowers borrow from vaults (into which depositors deposit tokens). However, in contrast to other platforms, note that depositing in Kanpeki is NOT equivalent to "supplying" : depositing and borrowing are separate actions. Your deposit cannot be used as collateral when trying to borrow. If you want to borrow, you do not and should not deposit first.

## How much can I borrow?

The minimum that can be borrowed is \$1,000 worth of any of the 13 supported tokens. The maximum amount is limited only by the available amount of tokens in its vault.
As each debt is separate, there is also no such thing as an account "health factor"

## What are the fixed rates?

Interest rates in Kanpeki range from 2% to 10%.

## Why choose more than 2%?

The amount of KAE a borrower can earn is dependent on the \$ value of the repaid debt and its interest rate.
The higher the \$ value of the debt, the higher the KAE earned, and the higher the interest rate, the higher the KAE earned. However, for the same \$ value, a higher interest rate yields a higher amount of KAE earned.
In addition, albeit of lesser import, the duration of the debt increases the rate of the reward.
Example
If SpongeBob borrows \$10,000 @ 3% for 15 days, he will get more KAE than Squidward that borrows \$10,000 @ 2% for 15 days.
If Krabs borrows \$10,000 @ 3% but for 20 days, he will earn more KAE than SpongeBob even though the \$ value is identical. But if Plankton is staking KAE and, exactly like Krabs, he borrows \$10,000 @ 3% for 20 days, he will earn even KAE more than Krabs.
See the calculator at the bottom of kanpeki.finance to get a feel for the numbers.

## Is there a limit on the KAE earned?

The reward cap is the limit on the amount of KAE a borrower can earn from any one debt. The cap is 10,000 KAE (@ \$1/KAE) if you're staking but or 7,500 KAE (also @ \$1/KAE) if you're not. The cap changes (periodically) based on the market-value of KAE.
Anyone can update cap by interacting with the `KAOracle`

## What happens to unrepaid debts?

If the debt is never repaid, no KAE is earned. Only repaid debts grant their borrowers the right to claim any KAE.

## How does claiming KAE work?

The KAE reward allocated to every repaid debt is split in two — immediate and main — both of which can only be claimed once, and in order (the immediate reward comes first).

### Immediate Reward

33% of the total reward allocated to every debt is claimable immediately the debt is repaid.

### Main Reward

The remaining 66% of the total allocated reward starts to release as soon as the immediate reward is claimed. The release period is 45 or 90 days, dependent on:
• the duration of the debt — is it less than 26 days?
• how fast the debt was repaid relative to its duration — has at least 90% of the debt's duration elapsed?
• if you were staking when you took out the debt, if you still are, and whether the debt's duration was less than 27 days if you were staking at the time
Simply, the longer the debt and later you repay, the less time it takes for the main reward to release.

## How long can I borrow for?

The minimum duration is 10 days. The maximum duration is 30 days.
The longer the duration, the higher the KAE reward especially if you're staking KAE, and the faster the main reward releases.

## When can I repay?

You can first repay a debt 9 days after it begins. You can also partially repay a debt.
Partially repaying a debt grants you the option to free up a proportional amount of collateral backing the debt. That said, should you choose to not free up some collateral while partially repaying, this significantly improves your collateralization ratio thus making the debt safer from liquidation.
Collateral is only freed during a partial repayment if the new collateralization ratio is higher than the collateral token's initialization ratio

## Do I always pay the full interest?

Yes. Regardless of when the debt is repaid, the rate, and interest due, is fixed.

## Can I add more collateral to an active debt?

Generally, yes. But if your debt is in an undercollateralized state, you cannot add any more collateral until it leaves this state. You may be able to exit this state by reducing the liquidation ratio which is achieved by staking.

## Can I borrow and collateralize the same token?

No. The debt and collateral token must be different.
You also cannot borrow a stablecoin with another stablecoin as collateral. For example, borrowing USDC with USDT as collateral is impossible.

## What are the collateralization ratios?

 Asset Type Minimum/Starting Ratio Liquidation Ratio Stables 130% 125% ETH 143% 133% FTM & Others 150% 140%

## Can I reduce my liquidation ratio?

Yes. The liquidation ratio can be reduced by 3.5% if you're staking KAE.
If the collateral is a stablecoin, the liquidation ratio cannot be reduced

## What happens when I get liquidated?

A 5.5% liquidation fee is applied. This fee goes to the burner.
The liquidator is also compensated with up to 5.5% interest on the liquidated amount.
If any collateral is left, as might be the case in where an overdue debt hasn't been repaid, it's sent to the burner. To guard against this, borrowers can extend their debt, a feature available to stakers.

## Do I get liquidated if my debt is overcollateralized but past its due date?

Yes. To guard against this, borrowers can extend their debt before it's overdue, or at the very least, not liquidated.

## How can I extend a debt?

Debt extensions are only available to borrowers staking KAE.
The debt is extended for a fixed duration of 15 days. An extension requires that at least 150% of the amount that was borrowed be available for withdrawal. During an extension, a borrower pays the interest due on the debt instead of having to repay the principal.
Interest is also paid again when the debt is finally fully repaid