> For the complete documentation index, see [llms.txt](https://jpydf.gitbook.io/jpy-defi/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://jpydf.gitbook.io/jpy-defi/borrowing-and-trove-management/borrowing.md). # Borrowing Borrowing means depositing collateral and borrowing JPYdf. As in Liquity v2, borrowers set their own interest rate. ## Trove (borrowing position) A borrowing position is called a **Trove** and is represented as an NFT (the app labels it a "loan"). One address can hold multiple Troves, and each Trove records its collateral, debt, rate, and status. Transferring a Trove NFT transfers ownership of the borrowing position as it is ([Interest Rates & Trove Delegation](/jpy-defi/borrowing-and-trove-management/interest-rates-and-delegation.md)). You can borrow as long as the collateral ratio meets the requirements below. For example, a debt of 500,000 JPYdf against collateral valued at ¥1,000,000 by the protocol gives a collateral ratio of 200%. Collateral ratio determines liquidation risk; interest-rate ordering determines normal redemption exposure. The diagram shows how these differ from your own adjustments. ![How collateral and debt adjustments affect LTV, and how liquidation differs from normal redemption](https://2664012221-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2Fk6OsOkfOCs0PpKCrImRu%2Fuploads%2Fgit-blob-d633e3ce2b07315821f641faaa990eb282eae356%2Ftrove-management.png?alt=media) ## Loan ID Each Trove has a **Loan ID** equal to its Trove NFT token ID. The app shows it as a hexadecimal value starting with `0x`; it is different from a wallet address or a transaction hash. You can normally find it on the Dashboard loan card, in the loan detail page URL (`id=:`), or as the Trove NFT token ID in a block explorer. If an indexer outage prevents the app from loading loan history, find the Loan ID in a saved loan detail URL, the Trove NFT, or the event log of the opening transaction. In the app's manual input, enter only the lowercase hexadecimal `0x...` value without the branch prefix. If the explorer displays the token ID in decimal, convert it to hexadecimal first. The app finds the matching branch and rereads the owner, status, collateral, and debt from RPC. Do not interpret a loan missing from the history list as nonexistent or closed. ## What you need to open a Trove Each Trove has a minimum debt of **100,000 JPYdf**. When opening a Trove, you also deposit **0.0375 ETH** as fixed gas compensation for whoever liquidates it (the contracts lock it as WETH). This is not a fee: it is returned when the Trove is closed normally, but it cannot be used until then. In the app you pay it in ETH and receive it back in ETH on closing. Calling the contracts directly requires WETH. This gas compensation is required separately from the collateral in both branches. Network fees for each transaction are also paid in ETH, so having only the collateral in your wallet may not be enough to open or operate a Trove. ## Collateral ratio requirements A Trove’s collateral ratio is its collateral value at the protocol’s yen price divided by its debt, using ¥1 per JPYdf as the accounting reference. This calculation does not use JPYdf’s market price. When the collateral ratio falls below the **MCR (Minimum Collateral Ratio)**, the Trove becomes subject to [liquidation](/jpy-defi/borrowing-and-trove-management/liquidations.md). The more buffer you keep above the MCR, the less likely the Trove is to be liquidated when prices fall. Each branch also has a **CCR (Critical Collateral Ratio)**. Even if your Trove is above its MCR, you cannot open, borrow more, or withdraw collateral if the operation would bring the branch-wide collateral ratio below the CCR. While the branch is below the CCR, operations that lower the collateral ratio are restricted. A Trove in a Batch Manager must meet the MCR plus the BCR when joining and when adjusting collateral or debt, but its liquidation threshold remains the MCR. The values are in [Collateral Assets](/jpy-defi/collateral-and-pricing/collateral-assets.md). Debt does not stay at the amount you borrowed. Accrued interest, batch management fees, and redistribution from liquidations can increase it. Because the collateral ratio is calculated with this latest debt, a Trove can approach its liquidation threshold even if the collateral price does not change. ## Borrowing costs Besides the displayed annual rate (APR), consider the upfront fee charged on new and additional borrowing, Ethereum network fees, exposure to redemption and liquidation, and the fact that yield from deploying collateral externally does not accrue to the borrower. How rates and the upfront fee are determined is in [Interest Rates & Trove Delegation](/jpy-defi/borrowing-and-trove-management/interest-rates-and-delegation.md). Example of the external-yield effect: if you borrow 600,000 JPYdf against collateral worth ¥1,000,000 and the entire collateral earns 3% per year externally, the yield the borrower does not receive is worth ¥30,000 per year, equal to 5% of the borrowed amount only when converted at the reference of ¥1 per JPYdf. The actual effect depends on the share deployed, realized performance, and the collateral ratio. Currently, only collateral in the dUSDC branch is eligible for external deployment ([Collateral Strategies](/jpy-defi/collateral-and-pricing/strategies.md)). ## Repayment and closing A partial repayment cannot bring the remaining debt below 100,000 JPYdf. If the repayment is too large, the contracts reduce it to the allowed maximum. Closing requires repaying the full latest debt, including accrued interest, fees, and redistributed debt. While a branch is live, you cannot close a Trove even if you can repay in full when: * closing would bring the branch-wide collateral ratio below the CCR, * a price failure is detected, or * it is the last remaining Trove in that branch (so that redistribution always has a recipient). After a branch has been permanently shut down, Troves can be closed without these constraints. ## Zapper Wrapping collateral, depositing it, and borrowing are normally separate operations, but the **Zapper** combines them into one transaction. The Zapper is optional; you can also perform each operation individually.