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Efficiency Mode

Introduction

Efficiency mode (or E-Mode) allows borrowers to enhance their capital efficiency when using certain collateral assets.

This is done by categorizing price-correlated assets (e.g. stablecoins) into the same E-Mode category. If both the borrowed and collateral assets are in the same E-Mode category, users can enable to E-Mode to give them a higher Loan-to-Value (LTV) and Liquidation Threshold.

This gives E-Mode borrowers a higher borrowing power such that they can borrow more assets for the same value of collateral.

By default, E-Mode is not enabled, and users must activate it.

More detailed specifications about E-Mode can be found on the Carbon guide.

Activating E-Mode

Before enabling E-Mode categories, you need to return any borrowed assets that are not available in the respective E-Mode category. This ensures compliance with the selected category.

To activate E-Mode:

  1. Tap the 'Disabled' option, which will prompt a pop-up to appear.

  2. Select the desired E-Mode category. For example, selecting 'Stablecoins' limits borrowing to only stablecoins.

  3. Under the selected E-Mode category, you can view the list of assets available for borrowing. For instance, under the 'Stablecoins' E-Mode category, users can borrow USD, USDC, and BUSD.

  4. The increase in your LTV will also be reflected.

When disabling E-Mode, your LTV will decrease to the original value. That means that if your Health Factor is close to 1, you may need to first return the extra borrowed assets or top up your collateral

Switch E-Mode Category

In order to switch E-Mode categories, it is necessary to return any borrowed assets that are not available in the current E-Mode category. This ensures compliance with the asset requirements of the selected E-Mode category.

To switch to a different E-Mode category

  1. Click on the ⇆ icon.

  2. Select the desired E-Mode category from the available options.

  3. The available assets for borrowing and associated maximum LTV will be adjusted according to the new category.

  4. Confirm your selection by clicking 'Switch'.

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