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How to repay my loan?

How to maintain a high level of loan health to mitigate the risk of your collateral being liquidated.

Updated over a week ago

How to maintain a higher loan health?

In order for you to make sure there isn’t high risk of your collateral being liquidated, you can do one of the following:

  • Repay the outstanding amount - In the Wallets section in the Axon app, when a loan is taken, you will see Debt wallet within your Instant wallet, to which you can make partial or full repayments. Repaying part of the loan will increase the loan health so that the collateral is not at risk. You can do so from the Wallets section in your app, scroll to the Debt wallet and when you tap on it, you will see the Repayment option.

  • Deposit more collateral - Within the Instant wallet, you will have a Collateral wallet to which you can deposit additional amounts in case the loan health dropped.

How much interest will I pay?

When borrowing from Aave’s pools through Axon’s app, the accrued interest is a variable one. That means that the rate changes constantly depending on the market conditions and the borrowing rate which is derived from the supply and demand ratio of the asset.

When should I repay the loan?

There is no fixed time period to pay back the loan. As long as the position is safe, you can borrow for an undefined period. However, as time passes, the accrued interest will grow making the health factor decrease, which might result in collateralized assets becoming more likely to be liquidated.

What would happen if I don’t repay the loan or add more collateral over time?

Being a decentralized platform, Aave’s loans are managed automatically through smart contracts. In case the loan’s health drops drastically, the collateral will be automatically liquidated.

In what currency can I repay my loan?

The loan has to be repaid in the currency of the debt itself.

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