Chai Protocol
Chai Money Market
Chai Money Market is a decentralized lending protocol built onto the Chai ecosystem.
Chai Money Market offers investors the ability to lend or borrow against whitelisted assets, enabling the deployment of flexible DeFi investment strategies on the blazingly fast, low-cost Aurora network.

How does Lending work?


To engage with Chai's lending services, you must navigate to the Lending page on the website and deposit one of the whitelisted tokens. In return, we’ll provide you with a receipt. The interest accrued will be increasing over time. When you return the receipt to Chai's lending, you will receive your originally deposited token(s) + the additional earned tokens on top.


Users can supply assets, and also borrow against collateral assets. For example, a borrower can supply ETH to the protocol and then borrow an equivalent amount of another tokens. The amount of token the borrower can borrow is defined by the collateral factor of ETH. If for example, the borrower has supplied 1 ETH as collateral and the collateral factor of ETH is 80%, then he can borrow up 0.8 ETH worth of token.
The protocol has safety measures to restrict users from taking actions (such as borrowing more tokens or withdrawing collateral) that would cause them to exceed their borrowing limit.


Borrowers can repay tokens to Chai up to the borrowed balance. If partial repayment is made, the borrow balance may be non-zero, and continue to accrue interest. Repayment is a transfer of tokens from the borrower back to the token market.

Risk Management

It is important to point out that the above use-cases for Chai do not come risk-free. Borrowers of tokens risk liquidation if they are unable to keep a leveraged trade open, which in turn places lenders at risk of being unable to withdraw their deposit.
In the event of a shortfall, which is when a borrowing balance exceeds that of the borrowing limit, a portion of the borrower’s collateral will be liquidated to return the account to good standing. If your account is in a shortfall position, a liquidator can liquidate it to return your position to a balanced position; liquidation comes with a discount to help incentivize proper risk management for users of the protocol.
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How does Lending work?