Aave users are able to borrow cryptocurrency from the platform so long as they can deposit asset as collateral. The amount that you can borrow depends on the borrowing power of the collateral assets. However, not all crypto assets can be used as collateral. Also, the loan-to-value ratio of each asset depends on how stable the coin is.
You will need to pay the loan plus interest using the same asset. To repay the loan, simply log in to your account and head to the Borrowings section in the dashboard and hit the repay button. Choose the amount to pay and confirm your transaction.
Taking out a loan from the Aave platform is pretty similar to borrowing from some lending institutions. You can only take out a loan if you have a collateral with a value more than the amount of your loan. So if you fail to fully repay the loan, the lending institution will seize the collateral.
In the Aave platform, if cannot pay off your loan, the deposited collateral asset is sold to cover the loan's value. This is called asset liquidation. The only way to avoid this situation is to fully repay your loan. Aave borrowers can also use their collateral assets to pay off their loans.
Another way to avoid asset liquidation is to ensure your health factor has a higher value. The health factor is a numeric score of the safety of your collateral against the borrowed assets. The higher the number, the safer the asset is. If the health factor drops to 1, your asset will likely be liquidated unless you deposit more asset.
To avoid problems, it's best to fully repay the loan. If you have questions, feel free to contact Customer Support.
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