# GLoans

GLoans is Gemach's interest-free lending frontend, powered by the [Liquity protocol](https://www.liquity.org/). It lets you borrow the LUSD stablecoin by depositing ETH as collateral — with zero ongoing interest, censorship resistance, and full self-custody.

***

## Overview

Liquity is a decentralized borrowing protocol that allows ETH holders to draw 0% interest loans in LUSD. GLoans is Gemach's frontend to that protocol — adding privacy infrastructure, load-balanced uptime, and a streamlined interface on top of the battle-tested Liquity smart contracts.

**Access GLoans:** [stake.gemach.io](https://stake.gemach.io)

***

## Key Properties

| Property                 | Details                                                              |
| ------------------------ | -------------------------------------------------------------------- |
| Collateral               | ETH only                                                             |
| Borrowed asset           | LUSD (USD-pegged stablecoin)                                         |
| Interest rate            | 0% — no ongoing interest charges                                     |
| Minimum collateral ratio | 110% (maximum LTV: \~90.9%)                                          |
| One-time fee             | Small issuance fee at time of borrowing (algorithmically determined) |
| Redemption               | LUSD is always redeemable for $1 of ETH at face value                |
| Governance               | None — fully algorithmic, no admin keys                              |
| Kickback                 | 80% of all network fees and rewards pass through to users            |

***

## How It Works

### Borrowing (Opening a Trove)

1. **Deposit ETH** — Lock ETH in a smart contract (called a "Trove") as collateral
2. **Borrow LUSD** — Receive LUSD up to the limit defined by your collateral ratio
3. **Use LUSD** — Spend, swap, or deploy LUSD anywhere it is accepted
4. **Repay when ready** — Return LUSD at any time to close or adjust your Trove — no repayment schedule, no deadline

### Earning on the Stability Pool

Beyond borrowing, you can deposit LUSD into the Stability Pool to earn:

* **ETH liquidation gains** — when under-collateralized Troves are liquidated, Stability Pool depositors receive their share of the ETH collateral
* **LQTY rewards** — protocol reward tokens distributed continuously to Stability Pool depositors

### Staking LQTY

Stake LQTY to earn a pro-rata share of borrowing and redemption fees generated by the protocol, paid in ETH and LUSD.

***

## Collateral Ratios and Liquidation

| Scenario               | Collateral Ratio | Status                                 |
| ---------------------- | ---------------- | -------------------------------------- |
| Safe zone              | > 150%           | No liquidation risk                    |
| Recovery mode boundary | \~150%           | Monitor closely                        |
| Minimum requirement    | 110%             | Immediate liquidation risk if breached |

> ⚠️ **Warning:** If your Trove's collateral ratio drops below 110% (or below the system collateral ratio during Recovery Mode), your Trove can be liquidated. Monitor ETH price movements carefully and maintain a comfortable buffer above the minimum ratio.

***

## Key Advantages

**Interest-free borrowing** — Liquity charges a one-time issuance fee when you open a Trove, but there is zero ongoing interest. You can hold a loan open indefinitely at no additional cost.

**Censorship-resistant** — The Liquity smart contracts have no admin keys and cannot be paused, modified, or shut down by any party. GLoans simply provides a frontend to these immutable contracts.

**Redeemable stablecoin** — LUSD maintains its peg via a hard redemption mechanism: any holder can redeem 1 LUSD for $1 worth of ETH from the lowest-collateralized Troves at any time. This creates structural backing independent of market sentiment.

**80% kickback** — GLoans passes 80% of network fee revenue back to users. The remaining 20% funds Gemach operations and development.

***

## Getting Started

### 1. Navigate to GLoans

Open [stake.gemach.io](https://stake.gemach.io) in a browser with a Web3 wallet extension installed.

### 2. Connect Your Wallet

Connect MetaMask, WalletConnect, or another Ethereum-compatible wallet. Ensure you have ETH on Ethereum mainnet.

### 3. Open a Trove

Enter the amount of ETH to deposit as collateral and the amount of LUSD to borrow. The interface will show your resulting collateral ratio. Aim for at least 150% to stay safely above the liquidation threshold.

### 4. Confirm the Transaction

Approve the transaction in your wallet. Once confirmed, LUSD will appear in your wallet and your ETH is locked as collateral.

### 5. Manage Your Position

Monitor your collateral ratio as ETH price moves. Add collateral or repay LUSD if the ratio drops toward the minimum threshold.

***

## Risks and Disclaimers

> ⚠️ **Warning:** Borrowing against volatile collateral carries liquidation risk. ETH price drops can quickly move your position toward the minimum collateral ratio. Always maintain a safety buffer and monitor your position regularly.

* **Liquidation risk** — ETH price volatility can trigger liquidation if your collateral ratio falls below 110%
* **Smart contract risk** — Liquity is extensively audited but no smart contract is 100% risk-free
* **Redemption risk** — If ETH/LUSD price conditions trigger mass redemptions, your Trove may be partially redeemed against (you receive equivalent ETH value in return)

***

## Resources

| Link                                            | Description                                    |
| ----------------------------------------------- | ---------------------------------------------- |
| [GLoans Platform](https://stake.gemach.io)      | Borrow LUSD and manage your position           |
| [Liquity Protocol](https://www.liquity.org/)    | Underlying protocol documentation              |
| [LUSD Documentation](https://docs.liquity.org/) | How LUSD works and peg mechanics               |
| [GLend](/gemach-dao/products/glend.md)          | Gemach's algorithmic money markets on Arbitrum |


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