Traditional Borrowing

Start off by going to https://app.zestprotocol.com and connecting a Stacks wallet. We currently support Leather, Xverse, OKX Wallet, Fordefi, and Asigna.

Getting Started

Before you can borrow, you need to supply an asset as collateral. Please refer to How to use Stacks Market to Earn Yield.

Only assets with the green checkmark under the corresponding "Collateral" column can be borrowed against.

As of writing this, all assets in Zest Protocol are in isolation mode: only one type of asset (e.g stSTX, USDC, STX) can be enabled as collateral at a time.

To change the asset to be enabled as collateral:

• Ensure you have no active borrowing positions

• Disable the "Isolated" toggle for the currently designed collateral asset and approve the transaction

• Enable the "Isolated" toggle for the new asset you want to use as collateral and approve the transaction.

Borrowing Against your Collateral

Once you have supplied collateral, "Borrow" buttons will light up orange under "Assets to borrow".

Now, find the asset you want to borrow in the ‘Assets to Borrow’ section and click ‘Borrow’. This will open the $XYZ popup.

In the Borrow $XYZ popup, a user can see how much they can borrow and the estimated liquidation price, which adjusts based on the amount they choose to borrow.

The liquidation price is the collateral asset price at which your collateral will get liquidated. If you get liquidated, you get to keep the asset you borrowed but you lose (potentially all of) your collateral.

What does the reminder of the borrow $xyz popup reminder means? 1) LTV (Loan-to-Value): ratio showing how much you've borrowed compared to the value of the collateral you've supplied.

e.g if you supply $1,000 worth of collateral and borrow $500, your LTV is 50%. 2) Max LTV: the highest LTV ratio you’re allowed before you can’t borrow more. 3) Liquidation Threshold: point where your LTV becomes too high, and your collateral is at risk of being liquidated (partially / fully sold to repay your debt). To learn more about liquidation, see:What Happens When I Get Liquidated?

When you have opened a loan, interest automatically accrues to your debt in the UI.

Health Factor

Once a user has an active borrow position, a Health Factor widget will appear, providing an easy way to view their loan status. It automatically calculates the user's Loan-to-Value (LTV) ratio in real-time.

Your health factor can range from 1 -> 100 (any number above 100 will reflect the ∞ symbol). A user can also click on the Health Factor tooltip for additional information about the liquidation risk parameters.

If your health factor value goes below 1 - your collateral will be put up for liquidation. See What Happens When I Get Liquidated?

Repaying your Loan

Once you have an open loan, you can repay it totally or partially by clicking "Repay". By partially repaying, you reduce your risk of liquidation. To see your new liquidation price for a repay amount, input a value in the repay input field.

Topping up Collateral

Once you have an open loan, you can add additional collateral to reduce your risk of liquidation. To add additional collateral, supply more of the asset you have enabled as collateral under "Assets to supply". The modal will show your new liquidation price.

For example: the user in this screenshot has stSTX enabled as collateral, so they will need to supply additional stSTX in order to reduce their liquidation risk.

What Happens When I Get Liquidated?

By design, you can only borrow up to 50% LTV (Loan-to-Value). Depositing $1,000 allows you to borrow up to $500, and your collateral will be put up for liquidation when your LTV ratio hits 70% and incur a 10% penalty fee.

All of the above applies unless the user is in E-mode, which allows borrowing up to 80% LTV for selected assets. Liquidation still follows the same process but is triggered at 85% LTV, with a reduced penalty fee of 5%. Read more about E-Mode here: E-Mode Borrowing

There are 3 main scenarios where liquidation can happen:

Scenario	Initial Collateral (STX)	Loan (Asset)	What Changes?	When Liquidation Happens	Result After Liquidation
1. Interest builds up	$1,000	$700 in USDC	Interest increases loan balance	LTV reaches 70% due to loan growing	Collateral liquidated to pay off $700 USDC loan + 10% penalty ($100 in STX) → $200 STX left
2. Borrowed asset goes up	$1,000	$500 in BTC	BTC increases 50% (to $750)	LTV reaches 70% due to borrowed asset rising	Liquidation + penalty unless more STX is added
3. Collateral drops in value	$1,000	$500 in BTC	STX drops 30% (to $700 collateral)	LTV exceeds 70% due to collateral falling	Liquidation + penalty unless more STX is added