# Borrower

The borrower selects&#x20;

* the collateral to deposit (ex. wBTC)
* the paired token to payback (payment currency, ex. Dai)
* Expiry (when to pay)
* A minting ratio, correlated with a collateralization ratio, also will affect the interest rate

They will receive the rcToken(s) and rrToken(s) after depositing collateral to the Ruler Protocol. They then sell the rcToken to lenders or a DEX pool to complete the cycle of borrowing.

Upon expiry of the loan, the borrower will need to pay back the loan with the paired token (ex. Dai) and rrToken, then receive the collateral back (ex. wBTC). If the borrower does not payback on time (miss the expiry), the loan is considered defaulted. The collateral (ex. wBTC) will be forfeited by the borrower and belongs to the lenders of the pair.

## Borrowing

* Borrower deposits collateral to Ruler Protocol to receive rTokens ("Deposit" button on UI)
* Borrower then sells rcTokens to receive a loan (this is zapped with the "Borrow" botton on UI)
* Borrower keeps rrTokens; to repay the loan before expiry and receive collateral back

![](https://2802068031-files.gitbook.io/~/files/v0/b/gitbook-legacy-files/o/assets%2F-MRd1Lnvv0h3Owvrv6Km%2F-MRhoWGWZ4rEshx3Efb5%2F-MRi04tMTrnFqnuSxDCc%2FScreen%20Shot%202021-01-23%20at%201.50.34%20AM.png?alt=media\&token=39e8b5ac-9860-4bf4-8537-1b481e5d2306)

## Repayment of a loan

{% hint style="warning" %}
With **Paired Tokens + rrTokens.**
{% endhint %}

* Borrower repays Ruler Protocol by providing the rrTokens and the to-be-paid loan amount in paired token **before expiry**
* Borrower receives collateral back

![](https://2802068031-files.gitbook.io/~/files/v0/b/gitbook-legacy-files/o/assets%2F-MRd1Lnvv0h3Owvrv6Km%2F-MRhoWGWZ4rEshx3Efb5%2F-MRi0AYYd2Ck_Kv5P6ZJ%2FScreen%20Shot%202021-01-23%20at%201.51.27%20AM.png?alt=media\&token=0369a946-5f07-4799-9939-4ff603df9677)

{% hint style="success" %}
**Example of a complete borrowing cycle**&#x20;

* Bob deposits 1 wBTC into Ruler Protocol, Bob gets 10k rrTokens and 10k rcTokens.‌
* He then sells 10k rcTokens for 9.5k Dai.‌
* Bob uses the 9.5k Dai to do whatever he wishes with no risk of liquidation.‌
* Before expiry, Bob pays 10k Dai + 10k rrTokens to Ruler and gets back 1 wBTC.
  {% endhint %}

{% hint style="danger" %}

#### Did you deposit collateral to the contract by accident without knowing what you were doing?  Please see the steps below for unwrapping .&#x20;

{% endhint %}

### Depositor unwraps to receive collateral

{% hint style="warning" %}
With **rrTokens and rcTokens,** a fee will be charged on the collatera&#x6C;*.*&#x20;
{% endhint %}

* The depositor returns rrTokens and rcTokens to Ruler Protocol **before expiry**
* The depositor receives collateral back

![](https://2802068031-files.gitbook.io/~/files/v0/b/gitbook-legacy-files/o/assets%2F-MRd1Lnvv0h3Owvrv6Km%2F-MRqTMU3c3y-W17NLi87%2F-MRqWSDlMb0QxnUxZRgX%2FScreen%20Shot%202021-01-24%20at%205.30.59%20PM.png?alt=media\&token=6e67ed85-9636-457f-9cdd-1b6861b63eae)
