> For the complete documentation index, see [llms.txt](https://beratlas-organization.gitbook.io/semper-ascendit/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://beratlas-organization.gitbook.io/semper-ascendit/overview/borrowing.md).
# Borrowing
#### **Borrowing $BERA Using $BATLAS as Collateral**
## **Mechanism:**
Users can borrow **$BERA** by using **$BATLAS** as collateral.
***
## **Loan Terms**
* **Collateral Requirement:**\
Users can borrow up to **99% of their $BATLAS value** in $BERA (**99% Loan-to-Value Ratio**).
* **Duration:**
* **Minimum:** 1 day
* **Maximum:** 365 days
* **Interest:**\
Interest rates are calculated linearly, starting with a **base rate of 0.05%**. Interest is collected **upfront** upon loan initiation from the borrowed amount.
* **Liquidation:**\
If a loan defaults, the **$BATLAS collateral is burned**. Since all loans are over-collateralized, burning the collateral increases the **$BERA backing per $BATLAS**.
* **Automated Liquidation:** All liquidation of **$BATLAS** collateral happens automatically
***
#### **Interest Rate Calculation Example (Python)**
```python
def linear_interest_rate(days, slope, base_rate):
"""
Calculate interest rate based on a linear model.
:param days: Number of days for the loan term
:param slope: Slope of the interest rate increase per day
:param base_rate: Base interest rate (for 1 day or 0 days)
:return: Interest rate in percentage
"""
return slope * (days - 1) + base_rate # Adjusting for 1-day base
# Example usage:
slope = 0.0548 # Slope factor from internal calculations
base_rate = 0.05 # 0.05% interest rate for a 1-day loan
days = 10
interest_rate = linear_interest_rate(days, slope, base_rate)
print(f"The interest rate for a {days}-day loan is approximately {interest_rate:.2f}%")
```
***
## **Burning Example (Liquidation)**
Suppose there are **100 $BATLAS** tokens in existence, backed by **100 $BERA** tokens in the contract. This means **1 $BATLAS = 1 $BERA**.
* A user borrows **99 $BERA** using **100 $BATLAS** as collateral.
* The user **fails to repay** their loan, leading to liquidation.
* **99.7% of the collateral (99.7 $BATLAS) is burned**, while the remaining **0.3 $BATLAS** is allocated to **LP incentives and the team**.
* Since the user's collateral represented all circulating $BATLAS, the **only remaining tokens are the 0.3 $BATLAS distributed to LPs and the team**.
The new $BATLAS price is calculated as:\
**1 $BERA / 0.3 $BATLAS = 3.333... $BERA per $BATLAS**
Thus, the **value of every remaining $BATLAS token has increased**!
> *Note: This example simplifies the calculation by excluding interest, which would further increase the $BERA backing per $BATLAS.*
***
## **Instant Default (Redeeming $BATLAS for $BERA)**
Similar to how **$BATLAS** is minted by depositing **$BERA**, it can also be **burned** to redeem the underlying asset:
* **Process:**
* A user **takes a 1-day loan** against their $BATLAS.
* The user **purposely defaults**, allowing them to **walk away with the underlying $BERA** while their $BATLAS is burned.
* This process **increases the $BERA backing per $BATLAS** over time.
* **Fees:**
* Subject to the **same 1% collateral premium and interest rates** as standard loans.
***
## **Flash Loans**
To support **leverage trading, arbitrage, and other financial strategies**, the **BerAtlas Finance dApp** will offer **seamless flash loans** with a **1% fee**.
---
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