# Example of Borrowing

![](https://986628987-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2F1Qp0nwxyx5F5286sTIOk%2Fuploads%2FY6Awe8uX0hsDuLcDviFS%2FTectonic-Example%20of%20Borrowing%20and%20Liquidation.png?alt=media\&token=a61a3df0-825c-444b-9104-3c8e101025a6)

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;