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Animation showing borrower loan automatically refinancing at maturity

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Overview

Auto Refinance automatically extends your borrowing position when it matures. Instead of needing to repay your loan and re-borrow, the protocol rolls your position into a new loan, keeping your capital deployed and avoiding liquidation risk at maturity.
Default Behavior:
  • Easy Mode: Auto Refinance is ON by default
  • Advanced Mode: Auto Refinance is OFF by default

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Why Auto Refinance Matters

At maturity without auto refinance:
If your loan matures and you haven’t repaid, your position becomes immediately liquidatable. Auto refinance prevents this by automatically extending your loan.
Without Auto RefinanceWith Auto Refinance
Must repay by maturityLoan automatically extends
Miss maturity = liquidation riskSeamless continuation
Manual monitoring requiredSet and forget
Must find new loan manuallyBest rate found automatically

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How It Works

1

Original Loan Matures

Your borrowing term ends (e.g., 90-day USDC loan)
2

System Checks Auto Refinance

Protocol checks if auto refinance is enabled for your position
3

Interest Settled

Accrued interest is settled:
  • Added to loan balance, OR
  • Deducted from collateral value
4

New Borrow Order Placed

Automatically places a new borrow order:
  • Same asset (USDC)
  • Same duration (90 days)
  • Best available rate
5

Order Matches

New order matches with lenders in the order book
6

Loan Extended

Your loan continues with new terms

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Configuration Options

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In Easy Mode

Auto Refinance is enabled automatically. To modify:
  1. Go to your position dashboard
  2. Click on the borrowing position
  3. Toggle “Auto Refinance” off
  4. Confirm the change
If you disable Auto Refinance, you must repay before maturity or risk liquidation.

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In Advanced Mode

When placing your borrow order, you can configure:
SettingOptionsDefault
Auto RefinanceOn / OffOff
Rate CeilingNone / Max rateNone
DurationSame / CustomSame
Max Refinances1-99 / UnlimitedUnlimited
Collateral Top-upAuto / ManualManual

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Rate Ceiling

Set a maximum rate you’re willing to pay: 
Original: 8% APY for 90 days
At maturity: Market is 10% APY
Refinance: New loan at 10% APY
Best for: Prioritizing continuous borrowing over rate

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Collateral Top-up

If accrued interest reduces your health factor:
  • Auto: Protocol adds collateral from your wallet (if available)
  • Manual: You must add collateral yourself before refinance

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Interest Handling

At refinance, accrued interest must be settled:

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Option 1: Add to Loan Balance

Original Loan:
  Principal: $10,000
  Rate: 8% APY
  Duration: 90 days
  Interest accrued: ~$197

After Refinance:
  New Principal: $10,197
  Collateral: Unchanged
  Health Factor: Slightly lower

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Option 2: Deduct from Collateral

Original:
  Collateral: $15,000 ETH
  Loan: $10,000
  Interest accrued: $197

After Refinance:
  Collateral: $14,803 ETH (sold $197 to cover interest)
  Loan: $10,000 (unchanged)
  Health Factor: Lower due to reduced collateral
The protocol chooses the method that maintains the healthiest position, prioritizing user safety.

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Refinance Scenarios

Situation: Market has liquidity at acceptable ratesOutcome:
  1. Interest settled
  2. New borrow order placed
  3. Order matches
  4. Loan extended
User experience: Seamless, no action needed
Situation: Health factor too low after interest settlementOutcome (Auto top-up enabled):
  1. Interest settled
  2. Protocol adds collateral from wallet
  3. New borrow order placed
  4. Loan extended
Outcome (Manual top-up):
  1. Refinance paused
  2. User notified to add collateral
  3. Must act within grace period or face liquidation
Situation: Rate ceiling exceededOutcome:
  1. Refinance not attempted
  2. User notified immediately
  3. Grace period to repay or adjust ceiling
  4. Liquidation if no action taken
User experience: Must intervene or be liquidated
Situation: No matching lenders availableOutcome:
  1. Refinance attempted, no match
  2. User notified immediately
  3. Grace period to repay
  4. Liquidation if no action taken
User experience: Must intervene or be liquidated

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Health Factor Considerations

Refinancing affects your health factor: 
Health Factor = Collateral Value / (Loan × Liquidation Threshold)
After refinance:
  • Loan increases (interest added)
  • Or collateral decreases (interest deducted)
  • Health factor goes down either way

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Maintaining Healthy Positions

Monitor Health Factor

Keep health factor above 1.5 for safety margin

Add Collateral Proactively

Top up collateral before maturity if needed

Enable Auto Top-up

Let protocol manage collateral automatically

Set Rate Ceiling

Avoid refinancing at unexpectedly high rates

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Notifications

EventNotification
Successful refinance”Loan refinanced: 90 days at 8.2% APY”
Refinance with top-up”Refinanced with $500 collateral added”
Refinance failed”⚠️ Refinance failed: Action required”
Upcoming maturity”Loan maturing in 24h, auto refinance enabled”
Health factor warning”⚠️ Health factor 1.2 - consider adding collateral”

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Gas & Fees

Gasless: Auto refinance transactions are gasless, the protocol covers gas costs.
Fee TypeAmount
Gas$0 (protocol subsidized)
Protocol fee0.1% of interest (same as new borrow)

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Managing Auto Refinance

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Enabling/Disabling

Change auto refinance status at any time before maturity:
  1. Navigate to position dashboard
  2. Select the borrowing position
  3. Toggle Auto Refinance
  4. Confirm change
If you disable auto refinance, set a reminder to repay before maturity!

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Viewing Status

Position dashboard shows:
  • Auto refinance status
  • Rate ceiling (if set)
  • Duration setting
  • Current health factor
  • Projected post-refinance health factor

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Comparison: Auto vs Manual

AspectAuto RefinanceManual Refinance
Liquidation riskMinimizedHigh if you forget
EffortNoneMust monitor and act
Rate controlCeiling optionFull control
GasFreeFree (gasless)
FlexibilityFixed parametersChoose fresh each time

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Best Practices

Keep Buffer Collateral

Maintain 20%+ buffer above liquidation threshold

Set Reasonable Ceiling

Rate ceiling should be 2-3% above current to allow for market movement

Enable Notifications

Always know when refinance events occur

Plan for Interest

Remember each refinance compounds interest into principal

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FAQs

Disable auto refinance before maturity, then repay your loan. Or repay anytime, early repayment is always allowed.
Use rate ceiling to prevent refinancing above your acceptable rate. If ceiling exceeded, you’ll need to repay or adjust.
If refinance fails and you don’t repay within the grace period, your collateral is liquidated to cover the loan.
Each refinance adds accrued interest to your principal. Over multiple cycles, this compounds. Plan accordingly for long-term borrowing.
Yes. Repay any amount before maturity. The remaining balance (if any) will refinance according to your settings.

Manage Your Loans

Configure auto refinance for your borrowing positions