> For the complete documentation index, see [llms.txt](https://ebisu.gitbook.io/ebisu-money/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://ebisu.gitbook.io/ebisu-money/using-ebisu/borrowing-ebusd.md).

# Borrowing ebUSD

## Overview

Ebisu uses **Troves** to manage loans. A **Trove** is a collateralized debt position linked to an Ethereum address. To borrow, users deposit supported collateral into a Trove and mint **ebUSD**. To withdraw their collateral, they must repay the ebUSD debt.

All Troves are **overcollateralized** and subject to protocol rules that maintain solvency, enforce risk isolation, and enable interest rate competition.

***

## How to Borrow

1. **Open a Trove** — Choose a supported collateral (e.g., weETH, WBTC, sUSDe) and create a Trove.
2. **Deposit Collateral** — Select the amount of the asset you want to lock.
3. **Choose Your Borrow Amount** — Specify how much ebUSD you want to borrow.
4. **Set Your Interest Rate** — You can choose a competitive rate manually or delegate rate management to a third-party. Interest is added to the debt of your Trove and can be repaid anytime. 
5. **Approve & Confirm** — Approve token transfers and confirm the transaction. Once complete, ebUSD is sent to your wallet.

{% hint style="info" %}
Note, changing your rate within 7 days of the last adjustment (or position creation) incurs a *premature-adjustment fee* equal to 7 days of average respective market interest, added to your debt.
{% endhint %}

## Key Features

* **User-Set Interest Rates**: You control your borrow rate. Lower rates mean lower cost but greater risk of redemption.
* **Yield Bearing Collateral**: Collateral yield accrues to your Trove. If yield + collateral appreciation > interest rate, the user's loan effectively repays itself.
* **Overcollateralized Loans**: Each loan must maintain a minimum collateral ratio or else face liquidation.
* **Flexible Repayment**: Repay anytime to close your Trove and to recoup your collateral.
* **Rate Delegation**: Automatically adjust your interest rate based on market conditions. (Coming soon)

## Key Risks to Be Aware Of

| Liquidation | Collateral price = liquidation price                                                                                                                            | Your debt is canceled, collateral seized, and redistributed to Stability Pool depositors. You keep any ebUSD you previously borrowed. | Maintain healthy CR, monitor markets, and add collateral/repay debt when loan health lowers.                                  |
| ----------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------- |
| Redemption  | ebUSD trades below $1. Arbitrageurs purchase discounted ebUSD and call `redeem()` to exchange it for collateral, starting with the lowest-interest-rate Troves. | Your debt is repaid = to collateral value redeemed (ie. net 0 loss), but you lose collateral exposure (no fee/penalty).               | Set a competitive rate relative to other Troves (see open Trove UI), use delegation, monitor ebUSD price for redemption risk. |

## Step-by-Step Guide

## Step 1: Connect Wallet

Click "Connect Wallet" on the app and choose the wallet holding your collateral assets.

## Step 2: Select Collateral Type

On the "Borrow" page, browse supported collateral options. Click "Open Trove" next to the asset you want to use.

## Step 3: Input Collateral & Borrow Amount

Use the modal to input how much collateral you're depositing and how much ebUSD you want to borrow. 

## Step 4: Set Interest Rate

Choose your interest rate manually or opt to delegate it to an automated manager. Lower rates save on borrowing costs but increase redemption risk.

## Step 5: Approve Token Transfer

Approve the collateral token so the Ebisu protocol can move it into the Trove smart contract.

## Step 6: Confirm Transaction

Click confirm to finalize your deposit and mint ebUSD. You’ll see your position reflected in the dashboard.

Now you can start fishing for yield with ebUSD!

***

Need help? Ping us in the Private Mainnet Telegram


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