# Loan
> Collateralized borrowing on Morpho and Aave through Ozmium - floating versus fixed rates, health factor and LLTV, liquidation mechanics, and staying solvent.
Source: https://docs.ozmium.org/guides/borrow/
Keywords: borrow against crypto base, morpho blue borrow, fixed rate defi loan, health factor liquidation, morpho midnight fixed term
Updated: 2026-07-27
---

Borrowing lets you access liquidity without selling the asset you hold. You post collateral, you draw
a loan against it, and you keep exposure to the collateral while you use the borrowed funds.

Both rails are available. **Variable rate** runs on [Morpho Blue](https://docs.morpho.org) and [Aave v3](https://aave.com/docs), where the cost moves with
utilization and you can repay whenever you like. **Fixed rate** runs on [Morpho Midnight](https://docs.morpho.org), where the
cost and the maturity are both settled at open. Variable is the default and the deeper market; fixed
is the one to reach for when you need to know the number in advance.

The cost of either is liquidation risk. Understand it before you draw.

## Variable Rate

Floating-rate borrowing runs on Morpho Blue markets and Aave v3. The rate moves with utilization: as
more of a market's supply is borrowed, the rate rises to attract new supply and discourage new
borrowing.

The lifecycle in Ozmium:

1. **Supply collateral.** Deposit the asset backing your loan.
2. **Borrow.** Draw against it, staying under the market's LLTV.
3. **Repay.** Pay down principal and accrued interest at any time.
4. **Withdraw collateral.** Once debt is cleared or health allows.

Each step is its own transaction, and each is visible in the app with live health readouts.

## Fixed Rate

Fixed-rate, fixed-term borrowing runs on Morpho Midnight books. Instead of a floating utilization
curve, you take liquidity from an order book at a rate that locks at execution to the market's stated
maturity.

Ozmium's fixed-rate borrow builder quotes the live bid book for your target size and encodes the
takes in order, clamped by a slippage-guarded worst price. In plain terms: it walks the book for you
and refuses to fill above the worst rate you accepted.

Fixed rate is the right choice when you need cost certainty over a known horizon. Floating is right
when you expect rates to fall or plan to repay quickly.

## Health Factor and LLTV

![Ozmium borrow view showing cbETH collateral against USDC, with the LTV bar, the liquidation ceiling at 86 percent, and rate history.](/img/ozmium-borrow-cbeth-usdc.webp ">> >> The LTV bar and the liquidation ceiling sit next to each other on purpose. Tap to enlarge.")

**LLTV** is the liquidation loan-to-value of the market - the maximum ratio of debt to collateral
value before liquidation becomes possible.

**Health factor** is where you actually sit relative to that limit. Above 1 you are solvent. At or
below 1 your position can be liquidated by anyone, permissionlessly, for a bonus.

Ozmium shows both, plus the number that actually matters day to day: **how far the market can move
against you before liquidation**. A health factor of 1.4 means nothing intuitive. "This position
liquidates if ETH drops 22 percent" means something you can act on.

## Liquidation

:::danger Liquidation is mechanical and immediate
Liquidations are enforced onchain by Morpho or Aave, not by Ozmium. Nobody warns you, nobody calls
you, and nothing pauses while you find your phone. There is no grace period and no appeal.
:::

Practical defense:

- **Borrow well under the limit.** Drawing to the maximum LLTV means any adverse move liquidates you.
- **Watch volatile collateral harder.** The more volatile the collateral, the more headroom you need.
- **Interest accrues.** A position that is safe today drifts toward liquidation over time even if the
  price never moves, because debt grows.
- **Repay early, not late.** Deleveraging into strength is cheap; deleveraging into a crash is not.

## Costs

| Cost | Notes |
|---|---|
| Borrow Interest | Floating markets accrue continuously; fixed markets lock at execution |
| Liquidation Penalty | Charged to you if you get liquidated, paid to the liquidator |
| Gas | Each lifecycle step is a transaction |

## Risks Worth Naming

- **Total loss of collateral is possible** in a sharp move against a highly leveraged position.
- **Rate risk** on floating markets: your cost can rise without warning.
- **Oracle risk**: liquidations are triggered by oracle prices, not by the price you see on an
  exchange screen.
- **Bad debt** can affect the market you borrowed from.
- **No grace period.** Onchain liquidation is immediate and mechanical.

### Underlying Protocols

{{protocols:morpho,aave}}

## FAQ

{{direct}}

### What is a health factor?

Health factor measures how far a borrow position is from liquidation. Above 1 the position is
solvent; at or below 1 anyone can liquidate it permissionlessly for a bonus. Ozmium also shows the
more useful figure: how far the market can move against you before that happens.

### What is the difference between floating and fixed rate borrowing?

Floating rates move with market utilization and can rise without warning. Fixed rates lock at
execution to a stated maturity through Morpho Midnight books, giving cost certainty over a known
horizon. Floating suits quick repayment; fixed suits planned spending.

### Can I be liquidated even if the price never moves?

Yes. Interest accrues continuously, so debt grows while collateral value stays flat. A position that
is safe today drifts toward liquidation over time if you leave it alone.

### Does Ozmium decide when I get liquidated?

No. Liquidation is enforced onchain by Morpho or Aave according to the market's LLTV and the oracle
price. Ozmium has no discretion, cannot pause a liquidation, and does not liquidate anyone.

### How much should I borrow relative to my collateral?

Well under the market's LLTV. Drawing to the maximum means any adverse move liquidates you
immediately. The more volatile the collateral, the more headroom you need.

## For Agents

- `GET /v1/loan/markets` - floating-rate markets with LLTV, borrow APY, and liquidity.
- `GET /v1/loan/fixed` - every live Morpho Midnight fixed-rate book with maturity and both sides'
  implied APRs.
- `GET /v1/loan/analysis/{address}` - borrow-position risk analysis for a wallet.
- `POST /v1/tx/loan/*` and `POST /v1/tx/fixed/*` - the full borrowing lifecycle as calldata.

See [Endpoint Catalog](/agents/endpoints/).

## Related

- [Earn](/guides/earn/) - the supply side of these markets
- [Risk](/guides/leverage/) - a different way to take the same risk
- [Terms And Risk](/company/terms/)