What Is Burrow (BRRR)? Complete Guide Review About Burrow.

What Is Burrow (BRRR)?

Burrow is a decentralized, non-custodial, pool-based interest rates platform that enables users to supply assets to earn interest, and to borrow against them to unlock liquidity. BRRR is similar in nature to Aave, Compound, and other pool-based protocols. BRRR runs natively on the NEAR blockchain, a layer 1, proof-of-stake, sharded blockchain with a Web Assembly runtime.

The BRRR protocol’s smart contracts are written in Rust. BRRR aims to unlock liquidity for interest-bearing assets, particularly layer 1 staking derivatives such as stNEAR and stETH. For instance, users of BRRR will be able to deposit stNEAR as collateral, then borrow more NEAR to create a leveraged staking position, or borrow a stablecoin to create a self-repaying position.

Burrow Storage Key Points

Audits & Risks

Audits, though a good practice to maintain security standards and minimize potential risks, are not an end-all-be-all when it comes to protocol security. Burrow completed audit of specific contracts does not equate to the security of the entire protocol and does not relate to other layers of risk such as runtime pricing or the human influence on protocols. Moreover, security does not mean the elimination of risk inherent in financial products always do your own research and manage risk appropriately.

Risks

Although Burrow take a multitude of safety precautions and BRRR contracts have been audited, participating in DeFi comes with certain risks. Below is a list of potential risks associated with using BRRR. While your smart contracts have been audited by third-party firms, they could theoretically have vulnerabilities.

Liquidation

Assets that are deposited or borrowed on the protocol could fluctuate in value due to the systemic risks of the issuing platforms or market volatility, including the loss of peg of certain pegged assets. This could result in the liquidation or closing of a user’s position.

Bad Debt

The risk of debt accrued by underwater positions in case liquidators do not liquidate in time during a period of high market volatility. Burrow they do your best to eliminate all the possible risks, DeFi is an industry where events that no one predicted can occur(the dreaded black swans). So please don’t invest your life savings, or risk assets you can’t afford to lose. Try to be as careful with your funds as are with your code.

Supplying

Users can supply assets to the protocol and immediately begin earning passive interest. The interest rates are variable and will fluctuate based on the utilization rate for the given asset. Users can withdraw their supplied assets at any time, as long as the utilization rate for the asset will be less than 100% after the withdrawal. If the withdrawal will raise the utilization rate to 100%, the withdrawal will be temporarily unavailable.

Users can also designate a percentage of their supplied assets as collateral. BRRR Assets not designated as collateral will not be subject to liquidation and will continue to accrue interest. Users can manage which assets are designated as collateral (and what percentage of each asset) at any time.

Borrowing

Users can BRRR against their supplied assets. All positions must be over-collateralized. If the value of a user’s collateral drops below the minimum collateral ratio, their collateral will be liquidated to pay off their debt. On BRRR, each asset has a unique minimum collateral ratio, as each asset carries unique risk. The collateral ratios of each asset can be found here.

The aggregate risk of an account can be understood through the Health Factor, which represents the combined collateral ratios of the borrowed assets. If the health factor is higher than 100%, it means the account is in a good state and can’t be liquidated.

BRRR the health factor is less than 100%, it means the account can be partially liquidated and can’t borrow more without repaying some amount of the existing assets or providing more collateral assets.