Cross-Protocol Loan
Overview
Borrowing on 246 Club is similar to borrowing from protocols like Morpho or Aave, but with a few twists:
You borrow one asset against a single collateral, up to the protocol’s maximum Loan-to-Value (LTV) ratio.
There’s no fixed repayment schedule. You repay whenever you choose, as long as your position stays below its liquidation threshold.
If your collateral’s value drops or your debt grows such that your LTV exceeds the Liquidation Threshold, your collateral may be liquidated to cover the loan.
What’s Different?
Collateral Earns Yield Elsewhere
Instead of sitting idle, your collateral is deposited in an external protocol (like a Morpho vault) to generate yield. Meanwhile, your borrowed funds come from Aave using delegated borrowing power from re-lenders. (Learn more about Re-Lending and credit delegation.)
Unified Market Structure & Pair Specific Risk Controls
While 246 Club presents multiple “pairs” of collateral and borrowable assets in the interface, liquidity isn’t siloed on a per-pair basis. We adopt a structure similar to Compound V3, where each market offers a specific borrowable token supported by multiple collaterals. (See details on market structure.)
Net APY
When you borrow, your Net APY is influenced by both the yield on your collateral and the interest you pay on your loan. We can think of it as:
Net APY = (Collateral’s Supply APY) – (Borrow APY × LTV)
Collateral APY
This is the yield you earn on whatever protocol your collateral is deposited in. For instance, if you deposit collateral into a Morpho USDC vault, you’ll earn that vault’s APY (plus any associated incentives).
Borrow APY
This is the interest rate you pay for borrowing your chosen asset. It combines Aave’s interest rate with an extra premium charged by 246 Club.
Because rates on Aave and 246 Club can change based on supply and demand, your effective Borrow APY can fluctuate over time. For details on how 246 Club sets these rates, see our Interest Rate Model.
LTV, LT
Each Collateral–Borrow Pair has a specific maximum LTV (the loan amount you can take relative to your collateral’s value) and a Liquidation Threshold. If your LTV surpasses the Liquidation Threshold, your position is at risk of liquidation.
Max LTV
The upper bound on how much you can borrow against your collateral.
Liquidation Threshold (LT)
If your LTV reaches this level, liquidation can be triggered.
Close Factor (CF)
Defines how much of your position is liquidated once you cross the threshold. (See our Liquidation Mechanics for more.)
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