Orbit Borrow

Borrowing works by using collateral as security for loans. There can only exist one borrow position per interacting address, although users may choose to generate more borrow positions with the use of multiple addresses to interact from. Borrowers can provide multiple Blast assets as collateral to a single borrow position, diversifying their exposure to price movements of a single collateral.

Borrowing Limit

The maximum value of assets you borrow, borrowing limit, is determined by the value of your collateral. Borrowing limits are set as the sum of posted collateral's value times its loan-to-value (LTV) value for all posted collateral assets.

Loan-to-Value Ratio

The loan-to-value (LTV) ratio indicates the portion of an asset's value that can be borrowed against. For example, if the LTV for USDC is 80%, a user can borrow up to 80% of the value of their provided USDC value. So, if they have $10,000 of value as collateral, they could borrow up to $8,000 against it.

LTV Values of Supported Collaterals

Ticker	Name	LTV Value
ETH	Blast ETH	80%
USDB	Blast USD	80%

Account Health

Account health monitors the risk level of your borrows. If the collateral's value drops below the borrowed amount, there's a risk of liquidation. This risk is determined by comparing the borrowed amount to the maximum LTV limit set by the borrow limit. Account health is scaled from 0-100%, when your account health reaches below 20%, a partial liquidation process begins. To prevent liquidation, borrowers can provide additional collateral to their position and improve their account health. Collaterals can also be withdrawn from a borrow position, as long as the borrower's account health does not go below the 20% value.

Borrow Interest

When borrowing on Orbit, users are charged a rate of interest, which varies for each asset and is represented as annual percentage rate (APR) values next to each asset on the Orbit web app.

The borrow rate on Orbit is proportional to the asset's utilization rate, calculated as:

$$borrowRate=utilizationRate\cdot multiplier + baseBorrowRate$$

Where $multiplier$ is a multiplier value defining the rate of borrow rate increase vs. utilization rate increase, and $baseBorrowRate$ is the baseline borrow rate applied even when utilization rate is zero.

Protocol Fees

A portion of accumulated borrow interest is not distributed to lenders, but instead kept as the protocol fee.

This protocol fee is later used to purchase ORBIT tokens from the open market, 100% of which is distributed to ORBIT stakers.

Interest Subsidization

Borrowers receive ORBIT incentive distributions, lowering their cost of borrows. Further details can be found here.

Liquidation

In the case of liquidation, either Orbit or a 3rd-party liquidator is rewarded with a 15% liquidation incentive. They proceed to liquidate a maximum of 50% of the borrower's collateral. Following the deduction of the liquidation incentive, the remaining funds are returned to the borrower, thereby stabilizing the borrower's account health.