Notional
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  • About Notional
  • FAQ
  • Notional Basics
    • fCash
    • Liquidity Pools
    • Lending
    • Borrowing
    • Providing Liquidity
  • Risk and Collateralization
    • Account Structure
    • Collateralization
    • Free Collateral Calculation
    • Liquidation
    • Settlement
  • Technical Topics
    • Notional AMM
    • Liquidity Provider Returns
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  1. Notional Basics

Borrowing

PreviousLendingNextProviding Liquidity

Last updated 4 years ago

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Users who want to borrow at a fixed interest rate can mint their fCash and sell it for currency. By selling fCash for currency, borrowers receive currency in exchange for the obligation to repay a fixed amount of currency at a specific future time.

First, a borrower deposits collateral into their Notional portfolio.

Then the borrower mints a pair of fCash tokens at their chosen maturity.

The borrower can now sell the positive fCash token into its liquidity pool in exchange for currency.

Now the borrower has currency they can withdraw and a future obligation to repay a fixed amount of currency collateralized by their ETH.

When the debt matures on December 1, 2020, the borrower can either repay the currency that they owe or their collateral can be used to cover their debt to the protocol.