# Borrowers

Borrowers use Diffuse Prime to gain leveraged exposure to curated yield strategies. The platform abstracts away the complexity, sourcing liquidity, swapping assets, and executing transactions, so users interact with a convenient UX with streamlined flow.

## Entering a yield strategy

### Strategy selection

Borrowers are free to select any available strategy suitable for their risk/return profiles. Similar strategies are packed in vaults, sharing liquidity for leverage between strategies.

### Collateral deposit

* Borrowers deposit approved assets into the vault as **collateral**, which determines their borrowing power.
* Higher collateral increases borrowing power, enabling larger positions.
* Accepted **collateral types** include:
  1. Vault’s main asset (e.g., ETH, USDC, BTC)
  2. Yield strategy asset (e.g., PT-eUSDe-14-aug-2025)
  3. Intermediate assets (e.g., USDe, eUSDe) - planned for future versions.

### Leverage selection

* Borrowers choose a leverage level or multiplier for their position based on collateral value. For example, at 3× leverage on a $100 deposit, a vault will borrow $200 more, deploying $300 total.
* Higher leverage means higher potential yield, but also higher risks.
* Limits for the leverage level are defined by the platform's **Risk engine** (TODO: link to risk engine docs here). The platform will show you safe leverage ranges and won't allow selections that exceed the maximum LTV allowed.

### Creating a strategy position

* After leverage is set, the vault deploys the combined funds (collateral + borrowed) into the selected yield strategy - those could be Pendle PT on Ethereum, Pendle LP on Arbitrum, Spectra PT, DeFi liquidity pools, partner protocol lending, or other approved strategies.
* Funds are moved automatically, no manual steps are needed from the borrower.
* Strategies are curated by Diffuse Prime in early versions, it's a limited set of pre-defined strategies to ensure safety and decent returns.
* Borrowers can track their position value, accrued yield that is generated continuously, and the position's health factor in real time.

## Withdrawal and claim

### Early withdrawal

* Borrowers can close positions and withdraw their funds before the strategy maturity date.
* This requires repaying borrowed funds, so early withdrawal fees apply - see [Protocol Fees](https://diffusefi.gitbook.io/docs/diffuse-prime/fees).
* Though this is not the preferred outcome, as it reduces capital efficiency, it provides flexibility for managing collateral and risk.

### Claiming rewards and collateral

* Once the strategy reaches maturity, borrowers can claim both:
  * Their initial collateral, and
  * The net rewards generated during the strategy lifecycle.
* Recovered funds can then be redeployed into new strategies.