> For the complete documentation index, see [llms.txt](https://maxbid-pro.gitbook.io/maxbid-pro/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://maxbid-pro.gitbook.io/maxbid-pro/borrow/how-it-works.md).

# How it works

### Borrow

Borrow lets you unlock liquidity from your tokens without selling them or opening a leveraged trade.

You deposit your tokens as collateral and borrow capital against them - while keeping your original exposure. There’s no directional bet, no long/short position, and no active P\&L to manage.

Think of it as:

**“I need liquidity, but I don’t want to sell my tokens.”**

| Trade (Long/Short)                       | Borrow                                        |
| ---------------------------------------- | --------------------------------------------- |
| You’re betting on price direction        | No directional exposure                       |
| Open a leveraged position with live P\&L | Take a loan against your tokens               |
| Hold a trading position                  | Keep your collateral + receive borrowed funds |
| Used when you expect price movement      | Used when you want liquidity without selling  |

### When to Use Borrow

Borrow may make sense when:

* You hold tokens you’re bullish on long term and don’t want to sell
* You need liquidity for new trades, DeFi opportunities, or stablecoin exposure
* You want access to capital without triggering a taxable sale event
* You need short-term liquidity while maintaining your current token position

***

### How It Works

1. Select a token from your wallet to use as collateral
2. Choose what you want to borrow (**WSOL** or **USDC**)
3. Set your **LTV (loan-to-value)** - this determines how much you can borrow relative to your collateral value
   * Higher LTV = more borrowing power
   * Higher liquidation risk
4. Review your loan details, including:
   * Borrowed amount
   * Interest rate
   * Liquidation price
5. Confirm the transaction

Once completed, the borrowed funds are sent directly to your wallet while your collateral remains locked in the protocol until repayment.

***

### Managing Your Borrow Position

Your borrow position appears in your dashboard alongside trading positions.

You can:

#### Repay

Repay part or all of your loan to reclaim your collateral.

#### Add Collateral

Deposit more collateral to lower your LTV and reduce liquidation risk.

#### Borrow More

Increase your loan amount using the same collateral. This raises your LTV and increases liquidation risk.

Interest accrues daily on your borrowed balance, similar to trading positions.

### How Borrow Positions Differ From Trades

* There’s no **Sell** action because this isn’t a trade
* **Borrow More** replaces **Withdraw** in position management
* **Add Collateral** works the same way as trading positions by lowering your LTV
* There’s no directional exposure or trade P\&L

***

### Risks

#### Liquidation Risk

If your collateral value falls and your LTV exceeds the liquidation threshold, your collateral may be automatically sold to repay lenders.

Monitor your health indicator and add collateral or repay debt before reaching liquidation levels.

#### Interest Costs

Interest accrues daily on the borrowed amount.

The longer you keep the loan open, the more interest you’ll pay - make sure the borrowed capital is being used effectively.