Borrow

Borrowing overview

Borrowing begins with creating a new vault. Each vault has a unique vault ID number.
Specific the amount of sBTC collateral to deposit.
Specify the about of BSD to borrow. You can then borrow BSD from the vault up to a 110% collateral/debt ratio (the minimum collateral ratio or MCR). The minimum debt to you can borrow is 1000 BSD. You must also pick your own interest rate. A variable one time fee for borrowing will be automatically added to your debt.
The BSD will be minted to your wallet. The collateral will be locked in your vault until you repay.
Your loan can stay open forever. But you should closely monitor the value of your collateral, your interest rate, and your interest payments as these could cause your collateral ratio shift.

Other vault actions

You can adjust the vault any time: Borrow more BSD, pay back BSD, add more sBTC, or remove sBTC as long as your vault maintains a 110% collateral ratio. You can also adjust the interest rate.
Vaults that have zero debt, and all collateral removed, will be closed.

Vault structure

Based vaults store values for your debt and collateral but also must account for continuously accruing debt from interest payments and some complexity related to Redistribution which is itself is a backup method for efficient liquidations when the Stability Pool is empty. The protocol uses these dynamically calculated Vault Total Debt and Vault Total Collateral values (along with the current Oracle price) to determine your vault's real-time Collateral Ratio.

Debt

Debt (borrowed-bsd field)
- The principal you originally borrowed, plus any subsequent borrows, plus any one-time borrowing fees, plus all interest that has already been formally accrued and capitalized in past blocks (up to the last-interest-accrued block height). This is the portion reduced first during repayments or redemptions.
Stored Protocol Debt (protocol-debt-bsd field)
- Debt assigned to your vault from previous system-wide redistributions (when liquidations occurred with an empty Stability Pool).
Calculated Protocol Debt
- When redistributions occur, the protocol updates global trackers rather than every vault instantly. This value represents your vault's share of any new redistributed debt added globally since the last time your vault's balances were fully synchronized (e.g., during your last transaction). It is calculated dynamically when needed registry::get-vault-protocol-shares and is added to your Stored Protocol Debt for real-time calculations.
Calculated Pending Interest
- This is the interest calculated registry::get-vault-accrued-interest based on your vault's Stored Base Debt (borrowed-bsd field) and active interest-rate, covering the period from the last-interest-accrued block up to the current block. This on-the-fly calculation captures interest owed since the last formal accrual event and is added to other components for real-time total debt figures.

Collateral

Stored Native Collateral (collateral-sbtc field)
- The sBTC you directly deposited into the vault.
Stored Protocol Collateral (protocol-collateral-sbtc field)
- Collateral assigned to your vault from previous system-wide redistributions.
Calculated Protocol Collateral
- Your vault's share of new redistributed collateral since the last time your vault's protocol-collateral-sbtc field was updated, calculated on-the-fly.

Borrowing and Vault FAQs

Why borrow BSD?

When you borrow BSD you’re utilizing the liquid value of your Bitcoin without selling. In practice there are a few common reasons why Bitcoin holders typically do this:

Use BSD to buy other digital or real world assets.
Sell BSD to buy more Bitcoin (leverage). This can be risky and we do not recommend it.
Secure BSD by providing BSD to the Stability Pool in exchange for rewards.
Redeem 1 BSD for 1 USD worth of sBTC.

What is sBTC? How can I get some?

sBTC is a programmable form of Bitcoin that serves as collateral within the Based Protocol on the Stacks blockchain. It is decentralized and secured by Stacks miners. The easiest way to get sBTC is to migrate some L1 BTC here: https://app.stacks.co/

How is my collateral secured?

sBTC secures your collateral via a network of industry leading institutional validators. These signers are responsible for approving all sBTC deposit and withdrawal operations, ensuring the integrity of the system.