Coinbase International Exchange

USDC Borrow

What is USDC Borrow?

USDC Borrow is available for users who have enabled cross collateral and provides traders with a solution for managing negative USDC balances by allowing them to borrow USDC without risking the liquidation of their non-USDC collateral. When engaging in USDC Borrow, Coinbase International Exchange places a hold on the non-USDC collateral, restricting the movement of these funds off the platform.

For detailed instructions on enabling cross collateral, please refer to our Help Center Article.

How is the notional value of a loan determined and what are the collateral requirements?

The notional value of a loan is determined by multiplying the loan quantity by the primary instrument (USDC) mark price. The Loan Collateral Requirement, configured per asset, ensures that the loan is collateralized above its notional value by multiplying the notional value by the asset's Loan Collateral Requirement Multiplier.

Current Multiplier are available via API titled "loan_collateral_requirement_multiplier"

What impact does USDC borrow have on the portfolio's total value and how is it tracked?

USDC borrow reduces the portfolio's total value by subtracting the loan collateral requirement amount. This deduction is aggregated for all amounts of USDC borrowed.

What checks are in place to ensure sufficient funds and what are the limits?

Portfolios with cross collateral enabled undergo various checks to ensure they meet margin requirements considering collateral constraints. Borrow limits are set by the minimum and maximum borrow amounts configured for each asset.

Current borrow amounts  are available via API titled ""min_borrow_qty" and "max_borrow_qty"

How do we calculate interest, when is interest paid and how do we decide repayment priority?

Interest on the USDC borrow balance is calculated every 30 seconds, accruing at an interest rate of 10% APY.

Interest will be paid at midnight UTC, where the interest balance will be repaid prior to the borrowed principal amount

What if my account doesn’t have sufficient collateral for USDC Borrow?

If additional borrowing is not possible, USDC deficit can lead to collateral liquidation or rolling debt.  The handling of USDC deficit runs independently from margin requirements for perpetual futures positions. 

What is rolling debt and what impact does it have on my account?

Rolling debt occurs when the user lacks assets to cover charges such as interest payment, trading fees, funding or realized losses and are unable to engage in USDC Borrow.

Rolling debt is settled by using collateral from other portfolios within your account, and prevents further position openings until repaid. It reduces the portfolio's total value for margin calculations, restricts withdrawals of non-USDC collateral, and may potentially trigger immediate collateral liquidation.