Borrowing

How Can You Borrow Using Axiom?

To borrow, initiate a vault and deposit a specified amount of collateral. Subsequently, you can obtain a certain sum of $AXUSD, provided your collateral ratio remains above 110%. A minimum debt of 2,000 $AXUSD is mandatory.

Within a vault, two account balances are recorded: one for collateral assets (like WETH, stETH, wOETH etc) and another for debt denoted in $AXUSD. You can adjust these balances by adding collateral or repaying debt, which in turn alters your vault’s collateral ratio. You're free to settle your debt at any time to close your vault.

Are there fees associated with borrowing?

Yes, as a borrower, you'll encounter two types of fees: a one-time borrowing fee and flexible borrowing interest.

One-time borrowing fee:

Each time you withdraw $AXUSD from your vault, Axiom imposes a one-time borrowing fee on the withdrawn amount, which is then added to your debt.

Kindly be aware that the borrowing cost is subject to change, determined by an algorithm. During regular operations, the borrowing fee cannot dip below 0.25%. However, during Recovery Mode, it decreases to 0.1%.

Furthermore, borrowing interest is levied based on a fluctuating rate depending on your debt status and the Total Collateralization Ratio (TCR) of the system.

Additionally, a Liquidation Reserve charge of 200 $AXUSD is imposed but will be refunded upon the repayment of your debt.

Another factor to keep in mind is the price of $AXUSD at the time of repayment. If you need to repay your loan and the market price of $AXUSD is $1.02, you'll effectively face a 2% "fee" to buy it. To avoid this, you can either provide the borrowed funds at any time or wait for $AXUSD to return to its $1 peg.