A Complete Guide to Collateral and Borrow Limits

A Complete Guide to Collateral and Borrow Limits on Justlend

Decentralized lending has transformed the way people use their crypto assets, allowing them to unlock liquidity without selling long-term holdings. One of the platforms leading this transformation on the TRON network is Justlend, a user-friendly lending protocol designed to make borrowing and lending both simple and efficient.

But to use Justlend effectively — and safely — it's essential to understand how collateral works, how borrow limits are calculated, and what affects your risk of liquidation. This guide breaks down everything you need to know in clear and practical terms.

What Is Collateral on Justlend?

Collateral is the asset you deposit into Justlend in order to borrow another token. It acts as protection for the lending pool, ensuring that your loan is backed by an asset of higher or equal value.

For example:
Deposit TRX → Borrow USDT
Deposit USDT → Borrow TRX
Deposit SUN → Borrow USDC

Collateral allows you to keep your original assets while accessing new liquidity.

How Collateralization Works on Justlend

Each asset available on Justlend has a specific Collateral Factor, also known as LTV (Loan-to-Value). This determines how much you can borrow compared to the value of your deposited collateral.

Example:
If TRX has a 70% collateral factor:
Deposit $100 worth of TRX → Maximum borrow = $70

This ensures the protocol stays secure even if prices fluctuate.

Understanding Collateral Factors: Why They Matter

Collateral factors vary based on:

Price volatility
Stablecoins often have higher collateral factors.
Volatile tokens have lower ones.
Liquidity depth
More liquid tokens can support higher borrow limits.
Risk level
Safer assets allow higher borrowing thresholds.

Common ranges on platforms like Justlend:

Stablecoins: 70–85%
Blue-chip tokens: 50–75%
Volatile or speculative assets: 40–60%

Knowing these numbers helps you avoid risky borrow positions.

Borrow Limits Explained

Your borrow limit is the maximum value you can borrow based on:

The total value of your collateral
The collateral factors of each asset
Real-time price feeds

Justlend shows this as a “Borrow Limit Used” percentage.

Low (0–40%) → Safe
Medium (40–70%) → Caution
High (70–90%) → Risk of liquidation
Critical (>90%) → Very high liquidation danger

A healthy borrow limit is the key to safe lending.

What Is the Health Factor?

The Health Factor determines how close your position is to liquidation.
It reflects the relationship between:

your total borrowed amount
your collateral value
liquidation thresholds

💡 Green HF → Your position is safe
⚠️ Yellow HF → Getting close to danger
🔥 Red HF → Liquidation possible at any moment

Maintaining a strong health factor is the best way to protect your funds.

How Liquidation Works on Justlend

If your borrowed amount becomes too high compared to your collateral value — usually because your collateral dropped in price — your position can be liquidated.

This means:

A portion of your collateral is sold
Your debt is reduced
A small penalty is applied

Liquidation ensures that lenders always remain protected.

How to Avoid Liquidation

Here are the most effective strategies:

⭐ 1. Borrow Less Than the Maximum

Many users stay at 30–50% of their borrow limit.

⭐ 2. Choose Stable Collateral

Assets like USDT or USDC help reduce volatility risk.

⭐ 3. Monitor Your Position Regularly

Even small price changes can affect your health factor.

⭐ 4. Add More Collateral if Needed

Topping up collateral quickly restores your safety margin.

⭐ 5. Repay Part of the Loan

Reducing the borrowed amount increases your health factor instantly.

Why Collateralization Is So Powerful

The magic of lending protocols like Justlend is that collateral lets you unlock liquidity without selling your assets.

This gives you:

Capital flexibility
Market exposure
Ability to borrow stablecoins for yield strategies
Opportunity to build leveraged positions
A way to avoid taxable events associated with selling (depending on jurisdiction)

Collateral turns your portfolio into a functional financial tool.

Which Tokens Can Be Used as Collateral on Justlend?

Depending on the market configuration, Justlend typically supports:

TRX
USDT
USDC
TUSD
SUN
WIN
BTT
DAI

Not all tokens may be enabled as collateral at the same time — the platform adjusts based on liquidity, stability, and risk.

Borrowing Use Cases on Justlend

Borrowing opens up many real, practical opportunities:

🔹 1. Access liquidity without selling crypto

Perfect for long-term holders.

🔹 2. Hedge against market volatility

Borrow stablecoins during turbulent conditions.

🔹 3. Farm with leverage

Deposit collateral → Borrow → Farm → Earn yield.

🔹 4. Buy dips strategically

Use borrowed assets to expand your holdings during pullbacks.

🔹 5. Manage cash flow

Borrow without disrupting your long-term portfolio.

Call to Action: Start Using Collateral Smartly on Justlend

If you want to take your DeFi strategy to the next level, understanding collateral and borrow limits on Justlend is the foundation.
It empowers you to:

borrow safely
optimize liquidity
reduce risk
build smarter financial strategies
keep your long-term assets intact

Whether you're a newcomer or an experienced DeFi user, mastering collateral mechanics will make you a more confident and efficient participant in the TRON ecosystem.

FAQ

What is collateral on Justlend?

Assets you deposit to secure your borrow position.

How much can I borrow?

Your borrow limit depends on collateral value and each asset’s collateral factor.

What happens if collateral value drops?

If your health factor falls too low, your position may be liquidated.

Which tokens support borrowing?

TRX, USDT, USDC, TUSD, SUN, WIN, BTT, and other approved TRC-20 assets.

How do I stay safe when borrowing?

Borrow conservatively, monitor your health factor, and maintain a strong buffer.