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Learn DeFi Lending & Borrowing

DeFi lending and borrowing allows users to earn yield on digital assets or borrow against them without relying on traditional financial intermediaries. Instead of banks managing funds and approvals, DeFi protocols operate through on-chain smart contracts that automatically enforce the rules of the system.

NAVI enables this process in a way that is transparent, non-custodial, and accessible to everyday users.

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Why Use DeFi Lending & Borrowing?

DeFi lending and borrowing offers:

  • Yield generation on idle assets

  • Access to liquidity without asset liquidation

  • Fully transparent, on-chain execution

  • Global, permissionless access

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Lending Assets (Earning Yield)

When you supply assets to NAVI, your funds become available for borrowing within the protocol.

  • Borrowers pay interest to access liquidity

  • That interest is distributed to suppliers as yield

  • Rates adjust automatically based on market demand

Your supplied assets continue to earn yield while remaining under your control. Withdrawals are available at any time, subject to available liquidity.

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Borrowing Assets

Borrowing on NAVI does not require credit checks or approvals. Instead, DeFi uses overcollateralization.

This means:

  • You must first deposit assets as collateral

  • Based on the value of your collateral, you can borrow other assets

  • The amount you can borrow depends on risk parameters like LTV (Loan-to-Value)

For example:

  • You deposit $1,000 worth of assets as collateral

  • You may be able to borrow up to $600–$750 worth of another asset

  • You deposit assets as collateral

  • Based on their value and risk profile, you can borrow other assets

  • Borrowed assets accrue interest over time until repaid

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Collateral & Health Factor

Each borrowing position is tracked using a Health Factor, which reflects how close a position is to its risk threshold.

  • A higher health factor indicates a safer position

  • A lower health factor means increased liquidation risk

Changes in asset prices or borrowed amounts will affect your health factor in real time.

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Liquidation & Risk Management

If a position becomes too risky, part of the collateral may be automatically liquidated to repay outstanding debt. This mechanism protects lenders and maintains overall protocol stability.

To help users manage risk, NAVI provides:

  • Clear health factor indicators

  • Optional alerts and notifications

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