> For the complete documentation index, see [llms.txt](https://lendxyz.gitbook.io/lend/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://lendxyz.gitbook.io/lend/fundamentals/self-repaying-loan.md).

# Self Repaying Loan

Borrow against your crypto assets while earning yield that automatically repays your loan over time

***

## Overview

The Self-Repaying Loan lets you unlock liquidity from your tokens without selling them. You supply collateral (ETH, WBTC, USDC, DAI) to [Aave V3](https://app.aave.com/), borrow USDC against it, and invest that USDC into Lend real-estate operations. The combined yield from your collateral and your Lend investment automatically repays your loan.

### Key Benefits

| Feature                | Description                                                                                     |
| ---------------------- | ----------------------------------------------------------------------------------------------- |
| **Instant Liquidity**  | Borrow up to 60 % of your token value immediately — no credit checks or lengthy applications.   |
| **Keep Earning Yield** | Your tokens continue generating yield (8–15 % APY) while used as collateral.                    |
| **Auto-Repayment**     | Rental income automatically services your loan, potentially achieving full repayment over time. |

***

## How It Works

```
┌──────────────┐       ┌──────────────┐       ┌──────────────────┐
│  Your Wallet │──────▸│   Aave V3    │──────▸│  Lend Operations │
│  (ETH, WBTC) │ supply│   Pool       │ borrow│  (Real Estate)   │
└──────────────┘       │              │ USDC  │                  │
                       │  Collateral  │       │  Rental Yield    │
                       │  earns ~2%   │◂──────│  earns 8–15%     │
                       │  APY         │ repay │  APY             │
                       └──────────────┘       └──────────────────┘
```

{% stepper %}
{% step %}

#### Supply Collateral

Deposit a supported asset (ETH, WBTC, USDC, or DAI) into Aave V3 through the Lend app. Your collateral begins earning supply APY immediately.
{% endstep %}

{% step %}

#### Borrow USDC

Borrow USDC against your collateral. The app enforces a safe borrow limit that keeps your Health Factor ≥ 1.5 to protect against liquidation.
{% endstep %}

{% step %}

#### Invest on Lend

Use the borrowed USDC to invest in Lend real-estate operations, which distribute rental income as yield.
{% endstep %}

{% step %}

#### Auto-Repay

When claiming rental rewards, choose **"Claim & Repay"** to route the yield directly toward your Aave debt via the `claimOpEpochsAndRepay` smart-contract function.
{% endstep %}

{% step %}

#### Loan Paid Off

Over time the combined yield (collateral APY + rental APY) exceeds the borrow interest, and the loan repays itself.
{% endstep %}
{% endstepper %}

***

## Yield Math

The net annual repayment is calculated as:

```
Net Repayment = Collateral Yield + Lend Yield − Borrow Interest
```

| Variable         | Typical Value | Description                                    |
| ---------------- | ------------- | ---------------------------------------------- |
| Collateral Yield | \~2 % APY     | Aave supply APY on ETH                         |
| Lend Yield       | 8–15 % APY    | Rental income from Lend real-estate operations |
| Borrow Interest  | \~4 % APR     | Aave variable borrow rate on USDC              |

### Example Simulation

| Parameter               | Value            |
| ----------------------- | ---------------- |
| Collateral              | 50 ETH           |
| ETH Price               | $2 000           |
| Supply Value            | $100 000         |
| LTV                     | 35 %             |
| Borrowed USDC           | $35 000          |
| Annual Collateral Yield | $2 000           |
| Annual Lend Yield       | $3 500           |
| Annual Borrow Interest  | −$1 400          |
| **Net Repayment / yr**  | **$4 100**       |
| **Estimated Payoff**    | **\~8.54 years** |

> Try the interactive simulator at [lend.xyz/self-repaying-loan](https://lend.xyz/self-repaying-loan).

***

## Health Factor & Liquidation

Your **Health Factor (HF)** measures the safety of your position:

```
HF = (Collateral Value × Liquidation Threshold) / Total Debt
```

| HF Range  | Status        | Meaning                                      |
| --------- | ------------- | -------------------------------------------- |
| > 1.5     | ✅ Safe        | Position is healthy.                         |
| 1.1 – 1.5 | ⚠️ Caution    | Consider reducing debt or adding collateral. |
| < 1.1     | 🔴 Danger     | At risk of liquidation.                      |
| < 1.0     | ❌ Liquidation | Aave will liquidate part of your collateral. |

The Lend app caps borrowing so your Health Factor stays at or above **1.5**.

***

## Supported Collateral

| Asset | Contract Address                             | Decimals |
| ----- | -------------------------------------------- | -------- |
| ETH   | Native (via WETH Gateway)                    | 18       |
| WBTC  | `0x2260FAC5E5542a773Aa44fBCfeDf7C193bc2C599` | 8        |
| USDC  | `0xA0b86991c6218b36c1d19D4a2e9Eb0cE3606eB48` | 6        |
| DAI   | `0x6B175474E89094C44Da98b954EedeAC495271d0F` | 18       |

***

## Claiming & Repaying

When your Lend investment distributes rental rewards you have two options:

| Action            | Contract Function       | What Happens                                         |
| ----------------- | ----------------------- | ---------------------------------------------------- |
| **Claim**         | `claimOpEpochs`         | Rewards are sent to your wallet as USDC.             |
| **Claim & Repay** | `claimOpEpochsAndRepay` | Rewards are routed directly to repay your Aave debt. |

Using **Claim & Repay** is the recommended path for a fully automated self-repaying experience.

***

## Contracts

| Contract          | Address                                      | Network  |
| ----------------- | -------------------------------------------- | -------- |
| Aave V3 Pool      | `0x87870Bca3F3fD6335C3F4ce8392D69350B4fA4E2` | Ethereum |
| Aave WETH Gateway | `0xD322A49006FC828F9B5B37Ab215F99B4E5caB19C` | Ethereum |
| Aave V3 Oracle    | `0x54586bE62E3c3580375aE3723C145253060Ca0C2` | Ethereum |
| USDC              | `0xA0b86991c6218b36c1d19D4a2e9Eb0cE3606eB48` | Ethereum |
| WETH              | `0xC02aaA39b223FE8D0A0e5C4F27eAD9083C756Cc2` | Ethereum |

***

## FAQ

<details>

<summary>Can my collateral be liquidated?</summary>

Yes — if your Health Factor drops below 1.0, Aave will liquidate part of your collateral. The Lend app mitigates this by capping borrows at HF ≥ 1.5.

</details>

<details>

<summary>What if the net repayment is negative?</summary>

If the borrow interest exceeds your combined yield (e.g. at very high LTV), the loan will not self-repay. The simulator will show "Never" as the payoff time. Lower your LTV or add more collateral.

</details>

<details>

<summary>Do I need to do anything after setting up the loan?</summary>

When rewards are available, visit your dashboard and click **Claim & Repay**. This is the only manual step — the smart contract handles the debt repayment automatically.

</details>

<details>

<summary>Can I withdraw my collateral?</summary>

You can withdraw or repay directly on [Aave](https://app.aave.com/) at any time, as long as your Health Factor remains above 1.0 after the withdrawal.

</details>

***

## Demo

{% embed url="<https://www.youtube.com/shorts/sHxbjHoU5hU>" %}