Borrowing

Borrowers provide collateral worth more than what they are asking to borrow, to incentivize them to pay back the debt. The borrow rate (e.g. interest paid to borrow) depends on the utilization rate for each asset, and increases as utilization increases too. The utilization rate is the percentage of the asset's pool that has been borrowed already.

To note that borrower assets keep earning yield while deposited, which helps borrowers offset interest paid to lenders.

As time goes on, the interest due on a particular position increases and so, the health factor associated with that position decreases. Although borrowers can theoretically maintain their position for an undefined amount of time, their decreasing health factor can result in a liquidation.

Borrowers are encouraged to monitor their positions to avoid liquidations, which happens when the borrower's health factor goes under a certain level. To avoid this, borrowers can either repay the loan or deposit more assets to increase their health factor. See how health factor is calculated here.