Borrow a cross-chain stablecoin with AVAX
Learn how to leverage AVAX with a low-interest stablecoin loan.
Balanced makes it easy to use your crypto as collateral to borrow bnUSD, the cross-chain stablecoin.
Learn more about bnUSD and how to borrow it with AVAX on Balanced.
What is bnUSD?
bnUSD is a decentralised stablecoin that tracks the price of 1 US dollar. It’s over-collateralised, so the total supply cannot exceed the value of the cryptocurrencies that back it.
You can use bnUSD wrapper-free on Arbitrum, Archway, Avalanche, Base, BNB Chain, Havah, ICON, Injective, Sui, and every additional blockchain Balanced connects to.
You can borrow bnUSD, transfer it cross-chain, and swap it for crypto on any connected chain.
Learn more about the bnUSD stablecoin.
How to take out a loan against AVAX
You can use AVAX as collateral to borrow up to 67% of the value in bnUSD, a decentralised cross-chain stablecoin. There’s a 0.2% borrow fee, and your debt will increase by 2% per year.
Loans are isolated, which means each collateral type (on every chain) has its own risk profile.
Each transaction includes a transfer fee that varies per chain. Transactions from Avalanche cost 0.003 AVAX.
1. Deposit AVAX as collateral
Go to the Home page and sign in. Then, from the Collateral section:
- Choose to deposit AVAX on Avalanche.
- Click Deposit and enter the amount. The amount of bnUSD you can borrow will appear in the Loan section.
- Click Confirm and complete the transaction.
2. Borrow bnUSD
Your debt is linked to your collateral, so you can receive and repay bnUSD on any chain you’re connected to.
Make sure the Collateral section is set to AVAX on Avalanche. Then, from the Loan section:
- Choose which blockchain to receive bnUSD on.
- Click Borrow, then enter the amount.
- Use the Position Details section to assess your risk.
- Click Confirm and complete the transaction.
3. Monitor your risk
The Position Details section helps you monitor your risk for each loan position. It includes the price that AVAX needs to reach to trigger liquidation, so you can assess your exposure to the current market conditions.
Balanced uses a “soft liquidation” method, so if your loan is ever worth more than 85% of your collateral value, some of your collateral will be sold to bring your debt below the liquidation threshold. If you have less than $100 of debt, all of your collateral will be liquidated.
To lower your risk before Balanced liquidators do it for you, reduce the size of your loan or deposit more collateral.
How Balanced’s cross-chain loans work
Balanced’s blockchain connections are powered by General Message Passing (GMP).
GMP is a cross-chain messaging service that can connect to any interoperability protocol or smart-contract capable blockchain. It relays transaction messages between connected chains, and includes multi-protocol verification to reduce dependency on a single bridge.
Balanced’s core contracts and liquidity reside on the ICON blockchain, which acts as the liquidity hub and settles all transactions from connected chains.
When you deposit AVAX as collateral, it gets locked in a contract on Avalanche. GMP routes the transaction through ICON, and deposits the ICON version of your collateral type into the Balanced Loans contract. When you borrow bnUSD, GMP relays the transaction from Avalanche to ICON, and then through to the bnUSD contract on the destination chain.
Leverage your AVAX with Balanced
Visit app.balanced.network to borrow bnUSD against AVAX and a range of cryptocurrencies from different blockchains. It’s fast, affordable, and your crypto stays wrapper-free.
To learn more about Balanced, check out the website, read the docs, and join the Balanced community on Discord.