Envision Tren's borrowing feature as a means of turning your non-custodial wallet into a credit card. This allows for the immediate expenditure of stablecoins (trenUSD), with the flexibility to settle the payment at a later date. The following guide will walk you through how to take a borrow position on Tren.
Go to the Modules page
After entering the platform, navigate to the "Modules" page, which can be found in the navigation bar.
Choose your Collateral
Scroll down to find the asset you want to use for your borrow position. In this example we will select "PEPE" as our asset.
To see more information about the module, click on the arrow to the far right of the module. This will show the risk parameters used for the selected asset. Alternatively, you can click on the "Open" button to go directly to the asset module page.
Asset Module
The next page you see is the Asset Module page, where you can take out and manage your positions.
Enter your Parameters
As we are taking a borrowing position, our first step is to allocate some collateral. Under the "Deposit" section, you'll find a box where you can enter the amount of collateral to deposit on the platform. In this example, we have entered 600,000,000 (600 Million) PEPE tokens to be deposited.
Next, enter the amount you want to borrow. As you do, the "Health Factor" and "Borrowing Power Used" will update in real time, helping you understand the risk associated with the position you're taking. You may also notice that in this example, I deposited $4,800 worth of tokens, but the maximum loan I can take out is worth $2,235. This is due to the Loan to Value (LTV) ratio set for this module. Since this one is set at 51.67%, your maximum borrowing power is 51.67% of the collateral you have deposited.
Open your Position
Once you're satisfied with the loan you're about to take, click the button at the bottom that says "Open Module".
A pop-up will appear, giving you an overview of the position you're about to take. If you're satisfied with how everything looks, click on "Approve", this will open up your wallet and ask you to set a spending cap. Follow the steps in your wallet to continue.
Once the spending limit has been approved, you will notice that the "Approve" Button has turned into "Borrow trenUSD". Click on this to open your position.
Confirm in Wallet
Your wallet will then pop up, asking you to confirm the transaction. Make sure to check the gas fees! If everything looks good, click "Confirm" to proceed with the transaction.
Position Opened
Congratulations! You have just opened a borrowing position on Tren! To confirm, you should see a pop-up in the top right of your screen, indicating that the transaction went through. You can also click on the pop-up to open a new tab, where you'll see the transaction on Etherscan.
Managing Positions
Borrowers are required to repay the trenUSD loan at a later date. Interest accrues on the collateral amount over time instead of the loan like traditional protocols. The interest rate may be fixed variable or algorithmic depending on the pool your position is in.
If the value of the collateral falls significantly and the Collateralization Ratio breaches the specified threshold, the position will be subject to liquidation
Both the modules page and the asset-specific module where your position is located offer the same functionality, allowing you to effectively manage your current position using either. The guide covers how to manage your position from the position page
Deposit
Improve the health of your borrowing position by depositing more collateral. This lowers the risk of liquidation and, at the same time, increases your borrowing power, allowing you to confidently take another loan within the same position.
Withdraw
Utilize the withdraw function to take out collateral from your position. We advise you to use this feature when the value of your collateral assets has substantially increased, allowing you to retrieve a portion of your assets without significantly impacting the health factor of your position. With an existing loan, you cannot withdraw the entire collateral because there needs to be enough collateral to fulfill the collateralization requirements for the trenUSD loan.
Monitor how this feature affects your health factor to avoid the risk of liquidation.
Borrow More
Use the "borrow more" option to acquire another loan of trenUSD within the same position without having to add more collateral. The ability to borrow more trenUSD is linked to the increase in the value of your collateral assets, while a decrease in their value restricts this borrowing capability.
Monitor how this feature affects your health factor to avoid the risk of liquidation.
Repay
Utilize the repay feature to settle your trenUSD loan. Clearing the full loan allows you to retrieve your collateral assets in full and terminate the position. Repaying a portion of the loan increases your borrowing capability and enhances your health factor. Pressing the Repay button presents two available options.
Repay with trenUSD balance
If you decide to repay the loan from your wallet balance, it's essential to ensure you have an adequate amount of trenUSD in your non-custodial wallet. You can either choose to settle the entire loan by using the "max" button or make a partial repayment.
Repay with Collateral
Alternatively, you have the option to settle your trenUSD loan by using the value of your collateral. The protocol will sell your collateral for trenUSD to repay the loan, allowing you to withdraw the remaining collateral once the loan is settled.
