# Cauldrons

[**Abracadabra**](https://abracadabra.money/) provides isolated lending markets that allow you to borrow against various forms of collateral. Our isolated markets are based on [Kashi Technology](https://boringcrypto.medium.com/the-bentobox-lending-solution-1351606b9f5a).

To learn more about isolated lending markets and the technical aspects of the Cauldrons, please refer to the [Developper Documentation](https://app.gitbook.com/s/AyUNiFaEKoywXDmFsJSp/core-contracts/cauldrons).

## Core Lending Concepts

It's important for users to understand a few key concepts to better use Abracadabra (and lending protocols in general). These concepts will appear throughout your use of the Abracadabra products.

<details>

<summary>Lexicon - Terminology</summary>

* **Collateral:** The asset you deposit into the Cauldron to secures your MIM loan.
* **Borrow:** "Simple" borrowing implies borrowing MIM and getting it in your wallet for you to use it however you like.
* **Leverage:** Leveraging is a special type of borrow where the MIM isn't sent to your wallet but used to acquire more Collateral and depositing it back into the Cauldron.
* **LTV (Loan to Value):** The current ratio between collateral value and borrowed value. It is often expressed as a percentage. Supplying 100 USD of Collateral and borrowing 50MIM gives you a LTV of 50%.
* **MCR (Maximum Collateral Ratio):** The Maximum LTV allowed for this market before being liquidatable. If ETH has an MCR of 80%, you can borrow up to 80 MIM per 100 USD of ETH.\
  This figure is market-specific, each collateral has a different MCR.
* **Mint Fee** (or Borrow/Opening fee): This fee is charged once, when you open the position. It is a percentage of the total amount you borrowed and it is added to your debt.\
  \&#xNAN;*eg: if a Cauldron has an opening fee of 1%, when you borrow 1,000 MIM, your debt will initially be 1,010 MIM.*
* **Interest Fee:** This is the interest charged on the MIM you borrow, per year.\
  \&#xNAN;*eg: if a Cauldron has an Interest Fee of 5%, your debt will increase by 5% each year.*
* **Liquidation Fee:** Discount at which the liquidator will buy the Collateral in order to repay the debt of an insolvent position. *More detailed information in the* [*Liquidations section*](https://docs.abracadabra.money/learn/intro/cauldrons/liquidations)*.*

</details>

## Borrow vs Leverage

Cauldrons allow users to borrow or leverage their positions (and inversely, repay or deleverage). While both actions share a lot of common steps, it is very important to understand the difference between the two.&#x20;

When a user borrows MIM, **you receive MIM in your wallet** to use however you like.&#x20;

When a user utilizes leverage, the MIM that is borrowed in instantly exchanged for more collateral and is then instantly deposited back into the cauldron. **You do not receive MIM in your wallet**.

<table data-view="cards"><thead><tr><th></th><th></th><th></th><th data-hidden data-card-target data-type="content-ref"></th></tr></thead><tbody><tr><td></td><td><strong>Borrow Guide</strong></td><td></td><td><a href="cauldrons/lending-markets">lending-markets</a></td></tr><tr><td></td><td><strong>Leverage Guide</strong></td><td></td><td><a href="cauldrons/leveraged-positions">leveraged-positions</a></td></tr></tbody></table>