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Storage Provider's borrowing limits
Before jumping into the limits of the Pool, it's important to understand two metrics: debt-to-equity (DTE) and debt-to-income (DTI). The DTE and DTI ratios are used to limit the amount SPs can borrow from the Pool.
The Pool enforces two borrowing limits:
- 1.DTE < 100% - the SP can only borrow an amount less than or equal to the amount of equity they bring to the protocol. As the SP earns more equity through block rewards, it can continuously borrow more.
- 2.DTI < 25% - the SP can only borrow an amount such that the weekly expected payment can be covered by 25% of the SP's weekly expected earnings.
Some examples of accepted/rejected borrow requests:
The GLIF Website will be updated with an SP calculator, which will show you your borrow amounts.
The borrow cycle
The Pool is meant to grow with the SP. As the SP borrows funds and pledges them to the Filecoin network, their expected earnings increase, allowing them to borrow more. As the SP earns block rewards, its equity value increases, increasing the SP's borrow cap.