How does borrowing/lending work at FTX?

How does borrowing/lending work at FTX?

If you have spot margin trading enabled, then you can lend out one spot token in order to borrow another; for instance you could lend out $50,000 in order to borrow 1 BTC. That USD would then be locked up and potentially loaned out to another user; you would receive interest if it was. Conversely, you would pay interest to another user on the 1 BTC you were borrowing.

There are a number of different ways to implement margin trading and borrow/lending. FTX’s is the most automatic in the industry, though the user still has full control over their borrowing and lending. Rather than requiring discrete actions to request borrows, receive them, move the funds, open/close positions, etc., the entire process is abstracted away into net balances.

As long as you have sufficient margin, you can borrow spot tokens simply by spending beyond your account’s balance of them.

So say that you have $50,000 (USD) in your account and nothing else. If you sold 1 BTC for $15,000 in the spot BTC/USD orderbook, your total balances would then be: +65,000 USD; -1 BTC. You didn’t have the BTC and so need to borrow it in order to sell it. FTX does this automatically when you sell, sending an order to the funding book on your behalf to borrow 1 BTC.

You can even do this with withdrawals! If your account has 3 BTC and nothing else, you can request a withdrawal of 1 ETH (despite not having any ETH!). FTX will automatically request a borrow for 1 ETH for you, and you can then withdraw that ETH. Note, however, that you cannot borrow to withdraw for greater size than is available and unused in the borrow-lending book!

So there’s no need to manage collateral vs margin positions vs withdrawable tokens vs margin trading vs spot trading. The same commands (buy/sell/deposit/withdraw) work normally and are allowed as long as your account has enough total collateral to support the necessary borrows.

Borrowing

For example: To borrow USD to do margin trading to buy bitcoin you need to first go to the BTC spot market trading.

Toggle "Margin" to enable trading on margin, a slider would appear.

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You can choose as much USD as you want to borrow for this trade. Click "Margin Buy" to execute

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Lending

Go to your wallet.

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Click "Margin Lending".

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Lets use USDC as an example, Click "Lend".

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You need to specify the quantity you want to lend.

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