# Lending Mechanics

## **How does borrowing on JPEG’d work?**

JPEG'd uses a peer-to-protocol borrowing mechanism. This means that the protocol is independent of any liquidity provision (lenders) or external factors.

<figure><img src="/files/cSs9wYjydkaAzmYbm9iA" alt=""><figcaption></figcaption></figure>

Any NFT from the [supported collections](https://docs.jpegd.io/jpegd-dao/about-the-lending-protocol/supported-collections) or the governance token [JPGD](/jpegd-dao/about-the-jpegd-protocol/tokens/usdjpgd.md) can be used as collateral in order to borrow either pETH (the Ether synthetic of JPEG’d) or PUSd (the stable synthetic of JPEG’d).

## **Can I borrow both pETH and PUSd on the same position?**

No, a user cannot borrow both pETH and PUSd on the same position. If a user wishes to switch to another borrow asset, any remaining debt must be paid off beforehand.

## **What are the differences between borrowing pETH and PUSd?**

When borrowing pETH, the protocol will charge a 5% or 10% interest rate depending on the [vault tier](https://docs.jpegd.io/jpegd-dao/about-the-lending-protocol/lending-mechanics/vaults-and-fees) their position is in.

When borrowing PUSd, the protocol will charge a 2% interest rate. PUSd can be swapped to any other main stablecoin (DAI, USDC, USDT) via the Curve. This can be facilitated by using the [swap tab](https://jpegd.io/swap) on our dApp.

## How can I borrow with JPGD?

Borrowing with JPGD is accepted as collateral on JPEG'd. Deposit JPGD in the JPGD vault

## **If I borrow pETH, is my LTV ratio subject to ETH’s price movement?**

No, because all NFTs used as collateral are priced in ETH. Considering you do not adjust your loan amount, this means that your LTV ratio is only dependent on the NFT collection’s floor price which is monitored by a [Chainlink oracle](https://docs.jpegd.io/jpegd-dao/about-the-lending-protocol/lending-mechanics/nft-pricing).


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