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# Borrowing

### Borrowing Assets

Users who want to borrow any of the supported cryptocurrencies, stablecoins, or digital assets from Lemond must pledge collateral that will be locked on the protocol. These assets must be over collateralized and will enable up to 80% of that collateral value borrowed.
These collateral ratios are determined by the protocol and are controlled through the Governance process. Once these assets are supplied, you can borrow based on the collateral ratio of the asset.
Typically collateral ratios are set anywhere from 50% to 80%. However, if a user’s collateral value drops below 80%, or whichever collateral ratio percentage that a certain asset has, it could cause a Liquidation event, which will be discussed in next chapter.
Users will have a compound interest rate that will be applied per block on these assets and have no monthly payment obligations. To return the collateral, the user must pay off their origination balance and compounded interest back to the protocol.
Market interest rates are determined by the specific yield curve that is designated in the contract. Depending on the market utilization, it will determine what the interest rate will be for that specified market.

### Interest Rates

Lemond protocol utilizes an interest rate model that achieves an interest rate equilibrium, in each money market, based on supply and demand.
Following economic theory, interest rates (the“price”of money) should increase as a function of demand; when demand is low, interest rates should be low, and vise versa when demand is high. The utilization ratio U for each market a unifies supply and demand into a single variable:
$Ua = Borrowsa /(Casha + Borrowsa)$
The demand curve is codified through governance and is expressed as a function of utilization. As an example, borrowing interest rates may resemble the following:
Borrowing Interest Ratea = 2.5% + Ua × 20%
The interest rate earned by suppliers is implicit, and is equal to the borrowing interest rate, multiplied by the utilization rate.

### ltoken Contracts

Each money market is structured as a smart contract that implements the specification. User’s balances are represented as ltoken balances; users can mint (uintamountUnderlying) ltokens by supplying assets to the market, or redeem(uint amount) ltokens for the underlying asset. The price (exchange rate) between ltokens and the underlying asset increases over time, as interest is accrued by borrowers of the asset, and is equal to:
As the market’s total borrowing balance increases (as a function of borrower interest accruing), the exchange rate between ltokens and the underlying asset increases.