# Borrow

<figure><img src="/files/heeoCV9ZWQHdVh3dAVuM" alt=""><figcaption></figcaption></figure>

Linx Lending enables users to borrow assets against overcollateralized positions in a trustless and efficient manner via the Linx App. Borrowers can access liquidity from isolated markets while benefiting from competitive rates and customizable risk parameters.

#### Key Features

* **Overcollateralized Loans**: Borrowers must deposit collateral (e.g., ALPH, LINX, WETH, WBTC) exceeding the borrowed amount to mitigate default risk.
* **Permissionless Borrowing**: Users can borrow from any market without approval, provided they meet the market’s LLTV requirements.
* **Customizable Markets**: Borrowers can participate in or create markets with specific collateral types, loan assets, oracles, and LLTVs, tailoring risk and cost profiles.
* **Liquidation Protection**: Automated liquidation mechanisms protect lenders by selling collateral if a borrower’s position becomes under-collateralized.

#### Borrowing Mechanism

Borrowing on Linx Lending follows a streamlined process:

1. **Market Selection**: Borrowers select a market with their preferred loan asset (e.g., USDC) and collateral (e.g., ALPH) via the Linx App.
2. **Collateral Deposit**: Borrowers deposit collateral, which must exceed the loan amount based on the market’s LLTV ratio (e.g., $10000 worth of WBTC as collateral for a $8000 USDC loan).
3. **Borrowing**: Borrowers receive the loan asset up to the LLTV limit. The DynamicFlowIRM calculates the interest rate based on market dynamics.
4. **Position Management**: Borrowers monitor their loan-to-value (LTV) ratio to avoid liquidation. If the LTV exceeds the market’s threshold (e.g., 86%), the protocol triggers automatic liquidation.
5. **Repayment**: Borrowers repay the loan plus accrued interest to reclaim their collateral. Partial repayments are supported, reducing interest costs.

#### Liquidation Mechanism

To ensure lender protection, Linx Lending implements a robust liquidation process:

* **Threshold Monitoring**: The protocol uses oracle(s) (e.g. DIA, more will follow) to track collateral and loan asset prices.
* **Liquidation Trigger**: If a borrower’s LTV exceeds the market’s liquidation threshold, the position becomes eligible for liquidation.
* **Collateral Sale**: The protocol automatically sells a portion of the collateral to repay the loan and interest, with a liquidation incentive factor (LIF) applied (e.g., maxLIF = 15%).
* **Bad Debt Handling**: If collateral is insufficient, bad debt is socialized across the market’s lenders, reducing total supply and borrow shares.

#### Benefits for Borrowers

* **Competitive Rates**
* **Capital Efficiency**: Higher LLTVs allow borrowers to maximize leverage, unlocking more liquidity against their collateral.
* **Flexibility**: Borrowers can choose or create markets with preferred assets and risk parameters, enabling tailored borrowing strategies.
* **Transparency**: Immutable market parameters and public oracles ensure predictable borrowing conditions.

#### Risk Management

* **Overcollateralization**: Reduces default risk by requiring collateral to exceed loan value.
* **Oracle-Agnostic Design**: Supports multiple oracle types (once more oracles become available) for accurate price feeds, reducing manipulation risks.
* **Audited Contracts**: Regular audits and formal verification enhance security, mitigating smart contract vulnerabilities.

####


---

# Agent Instructions: Querying This Documentation

If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question.

Perform an HTTP GET request on the current page URL with the `ask` query parameter:

```
GET https://docs.linxlabs.org/linx-whitepaper/linx-app/borrow.md?ask=<question>
```

The question should be specific, self-contained, and written in natural language.
The response will contain a direct answer to the question and relevant excerpts and sources from the documentation.

Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.