DeFi lending. Know the obligation.

Start by naming the position

Supplying assets and borrowing against collateral are different activities. Write down the supplied asset, collateral settings, borrowed asset, and resulting claim or receipt. Do not assume that the combined dashboard value tells you everything about the account’s obligations.

A borrower needs a repayment plan in the borrowed asset. A supplier needs to understand how withdrawals work when assets are being used in the market. Both should inspect contract and asset dependencies independently of the rate displayed on the interface.

Understand a buffer without turning it into a promise

Aave’s health-factor documentation defines a ratio of liquidation-adjusted collateral value to borrowed value. The full guide below uses hypothetical inputs to show how that ratio changes. Actual thresholds, supported assets, and liquidation details require verification for the exact deployment.

Separate the maximum amount allowed for a new loan from the parameters used to assess an existing one. An entry limit is not a recommended target. Model the debt side as well as the collateral side, and do not assume that a stable-looking borrowed asset has no relevant risks.

Write the repayment sequence in units

Describe how to obtain the borrowed asset, repay accrued debt, and withdraw collateral. Include conversion costs and network fees where relevant. Then test whether the sequence still works if market conditions become inconvenient or the usual interface is unavailable.

Monitoring and automation can support a process, but they also have dependencies. A plan should explain what happens when a notification is delayed or a transaction fails. A liquidation threshold is not a personalized reminder system.

Continue with the connected topics

Use the stablecoin hub for backing and redemption questions, the staking hub for receipt-token mechanics, and the security hub for controls and dependencies. The point is to explain the complete position, not just the largest number in a borrowing preview.