Why to Borrow on Summer.fi?

Why to Borrow on Summer.fi?

At the most basic level, Borrowing on Summer.fi enables you to get liquidity from the crypto assets that you already own (e.g., ETH, WBTC, stETH, etc.…).

Why Borrow on Summer.fi?

At Summer.fi, we mainly see 4 reasons why users borrow against their Crypto Assets.

Getting cash for a big purchase or costs On or Off-chain

We all have wants and needs, many of which cost money. One everyday use of borrow vaults is for users to borrow against their crypto assets to finance these wants and needs.

Some common examples are borrowing against your crypto to buy:

  • A house (new or renovations).
  • Pay employees or contractors.
  • A car.
  • Consolidate higher interest rate debt (eg. credit cards).
  • Living expenses.

By depositing your crypto in a Borrow vault and borrowing a stablecoin against it, you can get the money you need for that big purchase without selling. Of course, this is not a free lunch, as you still have to pay back the borrowed amount.

To learn more about how it works, visit our use cases page.

Capturing Carry Trade Opportunities

What if you could turn your Crypto into a high-yield asset? And in the case of Staked ETH, an even higher yielding asset.

A carry trade is when you borrow an asset at a low cost and then invest that borrowed capital at a higher rate of return. Sometimes in DeFi these opportunities emerge and present the conditions for yield generation.

Borrow vaults on Summer.fi make it really easy to do the borrowing and managing of positions, so that you can focus on constructing your strategy, and not worry about the difficulties of execution.

To learn more about how it works, visit our use cases page.

Farming juicy APYs for new protocol tokens

New protocols want your capital to bootstrap their ecosystems, and they will pay you nicely in tokens. This is also known as Token Farming. For example, AJNA, Morpho, and Ethena will all pay you in their respective tokens $AJNA, $MORPHO, and $ENA to use their protocols.

Borrow vaults allow you to have the best of both worlds. You can borrow stablecoins and use them in other protocols to token farm. This allows you to keep control and exposure to your underlying crypto collateral while earning large implied token yields.

To learn more about how it works, visit our use cases page.

Investing in new projects and tokens

You hold the crypto that you do because you decided at some point in the past that the asset would be more valuable in the future.

Sometimes, these opportunities arise again in the form of new tokens or projects you may want to invest in. Though, you may not always have the cash on hand to invest.

Borrow vaults allow you to access stablecoins against your crypto collateral, allowing you to keep exposure to the crypto you love while also taking advantage of new opportunities.

To learn more about how it works, visit our use cases page.

Other key benefits of borrowing on Summer.fi

Once you know why you are borrowing on Summer.fi, it is also good to understand the key benefits of borrowing on Summer.fi:

  • Keep the exposure to the crypto capital you love.
  • Underlying collateral exposure still benefits from price increases.
  • Non-custodial, you're always in control.
  • Enter and exit with any asset.
  • Swap to any asset when you borrow in the same transaction.
  • Close in one transaction.
  • Choose from all the highest-quality protocols.
  • Switch to a better rate or more optimal parameters easily.
  • Liquidation protection is available with Automated DeFi Position Management (Trailing stop, Stop loss)
  • Seamlessly manage risk with 1 transaction risk management action.

How do I choose the proper borrow position?

Now that you know why to borrow, the question becomes which borrow position/pair is right for you.

In short, you should decide on a pair based on 6 factors:

  1. Asset Selection: Which collateral do you have or deem fungible, and which Debt tokens do you want to be exposed to?
  2. Protocol: Which protocols do you trust?
  3. Liquidity: Is there enough available on offer for you to borrow?
  4. Borrow Rate, cost vs LTV/Max Available to borrow: How much do you want to be able to borrow against your collateral? and what at cost are you willing to pay to borrow?
  5. Borrow Rate, variability: How comfortable are you with rates changing rapidly?
  6. Protection, automation availability: Do you want access to Automated Position management tools?

For all other common questions and to learn how it all works, visit our knowledge base.

Open your borrow position

Ready to get started borrowing against your crypto collateral on Summer.fi?

Getting in touch

If you have any questions regarding Summer.fi, contact us at support@summer.fi or our social media.




Knowledge Base