> For the complete documentation index, see [llms.txt](https://docs.embrprotocol.org/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.embrprotocol.org/technical/protocol-mechanics/borrwing.md). # Borrwing ## Borrowing on EMBR EMBR protocol offers interest-free loans for users depositing BTC.b as collateral into a **Trove**. If a user wishes to hold their BTC as an asset but still unlock the capital behind it, rather than selling for another asset in the DeFi ecosystem. In doing so you are given $ESC, a USD stable coin, to use as long as you allow your trove to be open. A good example of using EMBR to further speculate on BTC, a user could loop their Trove deposits **up to 11x** essentially allowing for a leveraged long of BTC. {% hint style="danger" %} Using leverage in EMBR or any protocol is risky and not recommended to users inexperienced with this action. {% endhint %} ## Opening a Trove When looking to enter into the EMBR protocol, a user will open what we call a **Trove**. A trove is where you take out and maintain your loan. It's important to understand that each Trove is linked to one wallet address and can only ever have one Trove open at once. A trove manages two balances from a user: BTC.b, the acting collateral of the trove, and the other is debt denominated by $ESC. EMBR only accepts BTC.b on the Avalanche Blockchain as collateral and a minimum of $2,000 must be used when opening a new Trove. Each time you open a trove there is a one time fee ranging from 0.5% to a maximum of 5%. A Trove can remain open for as long as the user keeps their Total Collateral Ratio above liquidation levels and pays no interest to the loan. ## Fee Breakdown The borrowing fee is added to the debt of the Trove and is given by a `baseRate` . The fee rate is confined to a range between `0.5%` and `5%` and is multiplied by the amount of liquidity drawn by the borrower. {% hint style="info" %} Example: If the borrowing fee is 0.5% and a borrower wants to receive 10,000 ESC the user would be charged 50 in ESC. The borrower will incur a debt of 10250 ESC after the Liquidation Reserve and Issuance fee are added. {% endhint %} ## Collateral Ratio Collateral Ratio is the ratio between the value of your Trove collateral and its debt in $ESC. This ratio will be in constant flux based on the price of BTC and the total ESC debt you have taken on. You can always adjust your ratio by adding/removing debt or collateral from it. The minimum collateral ratio (or MCR for short) is the bare minimum of debt to collateral that can be taken out in a trove. For EMBR the MCR is set to `110%` , anytime your TCR were to fall under this percentage you are at risk for liquidation. If the protocol is set to **Recovery Mode**, EMBR protocol recommends that a users collateral is above `150%` to protect from liquidations. {% hint style="info" %} Assuming BTC is at a value of $30,000 and you deposit 1 BTC, your MCR would be 27,000 ESC. If you were to only borrow 15,000 ESC from this trove your TCR would be **200%.** {% endhint %} ## Handling of Liquidations of Troves When your Trove is liquidated you lose your collateral as you debt is paid off from the **Stability Pool** $ESC. At this point you will no longer be able to retrieve your collateral by repaying your debt. This will result in a net loss of `9.09% (= 100% * 10 / 110)` of your collateral's dollar value. [Read more about Liquidations](/technical/protocol-mechanics/stability-pool/liquidations.md) --- # Agent Instructions This documentation is published with GitBook. GitBook is the documentation platform designed so that both humans and AI agents can read, navigate, and reason over technical content effectively. Learn more at gitbook.com. ## 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, and the optional `goal` query parameter: ``` GET https://docs.embrprotocol.org/technical/protocol-mechanics/borrwing.md?ask=&goal= ``` `ask` is the immediate question: it should be specific, self-contained, and written in natural language. `goal` is optional and describes the broader end goal you are ultimately trying to accomplish on behalf of the user. GitBook uses it to tailor the answer towards what is most useful for that goal. 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.