A Guide to Burrow — A NEAR-Native Interest Rate Market

Burrow is pushing DeFi one step further by bringing one of the first-ever money markets to the NEAR blockchain, with a very unique value proposition that includes self-paying loans, and interesting core features. This article will provide you with an overview of Burrow’s functionality and help you get one step deeper into the NEAR ecosystem.

Burrow, a NEAR-native interest rate market

While supplying assets to platforms for interest or borrowing against those assets as collateral sounds familiar, Burrow as an interest rate market differentiates itself by allowing you to use interest-bearing assets, which form the foundation of the project’s value proposition.

Interest-bearing assets are staking derivatives of fungible assets held in investment funds and, therefore, accrue interest (yield a reward). In the crypto ecosystem, interest-bearing assets are staked derivatives such as stEth, stNear, aDAI, wBTC, etc.

Burrow, however, doesn’t just use any type of interest-bearing assets; it uses interest-bearing assets of base layers such as stNear, stEth, and wNear to unlock yields from the base layer. Yields from base layer chains have the highest returns and the most risk-free rates since staking directly on the base layer provide security to the chain.

Also, Burrow allows for self-paying loans. The peculiarity and unique nature of such a loan is that it repays itself with yields from interest-bearing assets. This means you are essentially borrowing against your future yield.

When supplying assets to the Burrow platform, you can decide to lock in some or all of these assets as collateral. These assets are interest-bearing assets, so your stNear or stEth (which is still yielding interest) becomes collateral, and you can now borrow from the platform. Depending on your assets supplied and the accruing interest, your loan may be paid off with interest from your supplied interest-bearing assets.

To create a self-paying loan position, you have to put interest-bearing assets as collateral and borrow stablecoins (USDT, DAI, USDC).

If you borrow a native token (Near or Eth), you will be creating a leveraged staking position instead.

In addition, Burrow allows fast and secure interoperability with other Layer-1 chains by leveraging the power of the Aurora Rainbow Bridge so that users access their assets on those chains with no hassle. Those assets can then be supplied to Burrow to unlock yields or take a loan.

What assets can I use on Burrow?

Burrow supports six assets for supply and borrowing:

• DAI
• USDT
• USDC
• NEAR (wrapped)
• ETH (wrapped)
• stNEAR
• stSOL and bLUNA (coming soon)

Core Features

Built on the NEAR blockchain

What this does for Burrow is leverage the power of two of the most advanced Layer-1 technologies found only on NEAR; Nightshade and the Rainbow Bridge.

By successfully combining the power of PoS and sharding in Nightshade, NEAR effectively solved the scalability problem for Layer-1 chains. This means Burrow operates on:

• Low latency
• A completely decentralized chain
• An infinitely scalable chain
• Very low fees for users

All of this without compromising on security.

User-Friendly UI

Unlike earlier dApps and services, where UX was the least developer concern, NEAR has made it a standard for all dApps on its platform to prioritize UX by paying considerable attention to user interfaces.

The Burrow UI is so clean and straightforward you may even find it refreshingly monotone.

The Use of interest-bearing assets

This one move is the foundation for Burrow’s entire value proposition. The concept is popular in the crypto ecosystem, but what stands out with Burrow is the application of it on one of the pioneer interest rate markets on the NEAR platform.

Burrow also does two interesting things by focusing on assets that are trustless, widely distributed, and have sufficient liquidity on DEXs (essentially Layer-1 staking derivatives):

• You secure the blockchain by supplying assets directly to the base layer.
• Burrow secures your investment and makes it practically risk-free by focusing on Layer-1 staking derivatives.

Getting Started with Burrow

1. Connect Near wallet

Access Burrow by connecting your Near wallet to the platform.

Click on “Connect Wallet” on the right-hand corner of the page and import your wallet.

2. Depositing your assets

To deposit assets, click on the deposit tab located at the top left corner of the page.

Click on the asset you want to deposit (the asset should be in your wallet) and select how much you want to supply. You can see the APY and collateral factor on the page.

Ensure to activate the radio button if you want to use the asset as collateral.

Click on “Deposit [asset name]” and you’re done.

3. Borrowing assets

Go to the top left of the page and switch to the “Borrow” tab to borrow assets.

Click on the asset you would like to borrow and use the slider to select the amount, or better yet, manually input the amount you want.

Keep an eye on the “Health Factor” shown in percentage. If the health factor drops to below 100% when you select an amount, it means your account can be fully or partially liquidated. You won’t be able to borrow any more until you repay the loan (full or partial) or supply more assets as collateral. If the health factor is above 100%, your account is clear and cannot be liquidated.

Click on “Borrow [asset name] to complete and sign the transaction.

Remember! if you borrow a native asset (Near, Eth, etc) you will be creating a leveraged staking position. To take a self-paying loan, borrow a stablecoin.

4. Repaying your loan

To repay a loan, switch to the portfolio tab. You will see your loan under “Borrowed Assets”.

Click on the “Repay” button and decide how much you want to repay using the slider or manually inputting the amount.

5. Withdrawing assets

Go to the portfolio tab and click withdraw under the “Deposited Assets’’ section to withdraw your assets. You can select the amount to withdraw by using the slider or manually inputting the amount and clicking “Withdraw [asset name]”

6. Adjusting your collateral

To adjust the amount of your assets set as collateral, go to the portfolio tab and click on “Adjust” under “Deposited Assets”.

Using the slider, you can adjust what percentage of your asset can be used as collateral.

DeFi on the NEAR protocol is taking on a third dimension with Burrow, as it joins Metapool and OIN to complete a trifecta of solutions on the platform. Burrow is still in its testnet phase and should be launching within the year. To stay up to date with Burrow, join their community on Discord, keep up with the latest news on their Twitter, or read more about them on Medium.

About Burrow

Burrow is a platform that allows users to supply and borrow interest-bearing assets to either earn interest or unlock liquidity.

Users can supply assets that accrue interest as APY or use these assets as collateral to borrow from the platform.

Stay up to date with everything Burrow on Twitter and Discord.

About Near

NEAR is a sharded, proof-of-stake, layer one blockchain that is built for usability and scalability.

NEAR combines the power of both PoS and sharding in a technology called Nightshade, making the chain infinitely scalable without compromising security and decentralization.

Catch the latest news around the Nearverse on Twitter and Discord.