Start here

How it works

One position, followed all the way through — deposit, limit, draw, repay, and what happens if the market turns. Every figure below is what the contracts would actually compute.

A loan against your portfolio, priced by an automated risk engine and funded by other users’ dollars.

The two sides of the market#

Nothing happens without both. Lenders bring dollars and want yield. Holders bring equity and want liquidity. The protocol sits between them and does one job: decide how many dollars a given basket of equity can safely borrow, and enforce that decision continuously.

	Lender	Borrower
Brings	USDG	Stock tokens
Receives	sUSDG + interest	USDG
Earns	Supply APY	Keeps market exposure
Risk	Pool insolvency, withdrawal delay	Losing collateral to liquidation
Can exit	Any time, liquidity permitting	Any time, by repaying

Both sides are permissionless and neither needs the other's permission to enter or leave.

Step by step#

Deposit your stock tokens

You send tokens into the collateral vault. They are held by a contract, not by a company — nobody can move them except you, and the liquidation engine under conditions you can read below. While they sit there they still track the underlying share price and still accrue the dividend multiplier.

The risk engine prices your basket

It looks at each asset’s volatility, the correlation between them, on-chain liquidity depth, the freshness of every price feed, and where we are in the US trading session. Out of that comes a single number: your effective loan-to-value.

A credit limit opens

Collateral value × effective LTV. This is a limit, not a loan — it costs nothing until you draw on it, and it stays open indefinitely.

You draw what you need, when you need it

All at once or in pieces over months. Interest accrues by the second on the drawn balance only, at a rate that floats with how heavily the pool is being used.

You repay and withdraw

Partial or full, on your own schedule, with no prepayment penalty. Once the debt reaches zero the vault releases everything.

Worked example#

A four-asset basket, market open, at the parameters currently listed on the collateral page.

Step 1–2 · deposit and price the basket

SPYon (ETF, 65% LTV)

40% of basket

$40,000

NVDAon (volatile, 40% LTV)

30% of basket

$30,000

AAPLon (mega-cap, 55% LTV)

20% of basket

$20,000

KOon (mega-cap, 58% LTV)

10% of basket

$10,000

Value-weighted LTV

the naive average

54.3%

Diversification credit

correlation-adjusted σ is lower than the weighted σ

+3.5pp

Effective LTV granted57.8%

Deposit one asset instead of four and the credit disappears — a single-name basket has nothing to diversify against.

Step 3–4 · limit and draw

Collateral value

$100,000

Credit limit

$100,000 × 57.8%

$57,800

You draw

52% of the limit

$30,000

Borrow rate

floats with pool utilisation

4.17% APR

Interest

$104 / month

Health factor

comfortable

2.28

Still available to draw$27,800

What that health factor of 2.28 means

It is the ratio between what your collateral is worth at liquidation prices and what you owe. Above 1, you are solvent. The further above, the more room you have.

health factor = (collateral value × liquidation threshold) ÷ debt

At $100,000 of collateral, a 68.4% weighted liquidation threshold and $30,000 of debt: (100,000 × 0.684) ÷ 30,000 = 2.28.

In plain terms: this basket could fall 56% before liquidation becomes possible at all — and Smart Deleveraging would step in well before that.

What happens as the market moves#

Basket moves	Health factor	What the protocol does
+10%	2.51	Nothing. Your limit grows.
−10%	2.05	Nothing. Your limit shrinks; your debt is unchanged.
−30%	1.60	Nothing. Still comfortably above target.
−50%	1.14	Nothing yet — but you are one bad day from the deleverage band.
−56%	1.00	Liquidation becomes possible. Smart Deleveraging would have acted at 1.10.

Computed for the $30,000 draw above. Draw less and every number moves further away.

Your debt does not grow when prices fall

A falling market shrinks your borrowing power, not your balance. If you have already drawn less than your new limit, nothing at all is asked of you. The only thing that changes automatically is interest, which accrues on the drawn balance regardless of price.

Where the interest rate comes from#

Nobody sets it by hand. It is a function of how much of the pool is currently lent out — utilisation. Below 90% the rate rises gently; above 90% it rises steeply, which pushes borrowers to repay and lenders to deposit, so the pool never runs dry.

U ≤ 90%: rate = (U ÷ 90%) × 5.5% U > 90%: rate = 5.5% + ((U − 90%) ÷ 10%) × 60%

At 68% utilisation the borrow rate is 4.17%. At 95% it jumps to 35.5% — deliberately painful, so liquidity comes back.

Lenders receive that rate multiplied by utilisation, minus a 15% reserve factor. See Lending USDG for the full arithmetic.

What you should read next#

If you are wondering whether borrowing beats selling: Why borrow instead of sell.
If you want the risk side first: Health factor then Liquidation & deleveraging.

Put your own portfolio through it

The calculator on the homepage runs these exact functions — change the basket and watch the limit, health factor and liquidation buffer move.