> For the complete documentation index, see [llms.txt](https://tectonic.gitbook.io/docs/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://tectonic.gitbook.io/docs/introduction/borrowing/example-of-borrowing.md).

# Example of Borrowing

![](/files/Y7HznjLy81UTLpQXwkKe)

Following the earlier example, John now wants to **borrow CRO** instead of redeeming his USDC:

1. John uses his 5,000 USDC as collateral.
2. With CRO's Collateral Factor of 75%, the maximum he can borrow is 3,750 USDC worth of CRO.
   * At the current exchange rate of 0.15 USDC per 1 CRO, this equals 25,000 CRO.
3. However, John chooses to be cautious and borrows only 12,500 CRO, keeping his collateralization ratio at 50%.
4. Assuming a 12% annual borrowing APY and constant USDC/CRO exchange rate, after 3 months, the interest adds up to:
   * 12,500 CRO × (12% ÷ 4) = 375 CRO
5. Total repayment = 375 + 12,500 = 12,875 CRO

**Important:**&#x20;

If CRO’s price increases during the loan period, the value of John’s debt rises. If this causes his collateralization ratio to exceed 75%, a liquidation event may occur—part of his loan will be repaid by selling some of his collateral to bring the ratio back within limits.&#x20;