Borrow crypto on NEAR with Burrow

Naomi Oba
5 min readAug 23, 2022

One of the cornerstones of DeFi activities is lending and borrowing. DeFi degens love to leverage their positions, and others just want to stay invested in their favorite crypto but have to pay real-world bills.

Whatever the reasons people want to borrow are, DeFi protocols make it possible without a centralized intermediary. When borrowing in the traditional financial system, most of it relies heavily on your credit score and perceived “reliability.” In crypto, things work differently, and I don’t mean the fact that people would just give 3AC an uncollateralized loan (this is just stupidity).

The defi-native way to borrow is through over-collateralization and using protocols that pool assets of people lending and provide them to traders looking to borrow. There are no credit checks and no ten-week-long processes. It’s as easy as connecting your wallet, depositing funds, and taking out a loan.

Of course, we all know that crypto is volatile, so how could we ensure that loans aren’t blowing up in our faces (like they do in TradFi sometimes)? Overcollateralization is key. That means having to deposit more than you take out as a loan. Do you want $100 in a loan? You have to deposit at least $150 worth of collateral.

Why would you do that? Primarily to leverage your positions or continue having exposure to your assets even when needing additional liquidity.

Enter Burrow

That said, Burrow is the protocol making DeFi lending and borrowing (or should we say burrowing) possible on the NEAR protocol. It’s a non-custodial liquidity pool platform similar to Aave and Compound on Ethereum.

It launched its testnet in December 2021 and has been on mainnet since march of this year. The protocol has undergone two independent smart contract audits to ensure security and recently raised $5 million from renowned crypto investment firms to bootstrap their initial trading liquidity.

One of their goals with the creation of Burrow, beyond bringing lending and borrowing to NEAR, was to unlock liquidity for interest-bearing assets. In practice, this might play out the following way. Investors know they can earn interest on staking NEAR. They stake it and receive a token in return for the NEAR they staked, something like stNEAR. This token can yet again be used because it’s clear that it is backed by locked NEAR. If they wanted to take on some risk, they could deposit stNEAR and take out a stablecoin loan or more NEAR to leverage their position.

On the supply side, burrowing offers depositors the opportunity to earn interest on their crypto assets, paid by borrowers.

Obviously, if you put yourself into the users shoes, you’d want to be very sure that the collateral value isn’t lower than the loan. Burrow monitors the health of accounts using a so-called health factor.

Health Factor

On Burrow, the health factor isn’t calculated per asset but per account. That may be a natural person, but might also just be one account of a person, because people can create unlimited wallets.

Either way, the health score describes the relation of all the collateral deposited to the amount of loan they have. If the score is over 100%, that means the loan is more than fully backed. Anything below that, and the account runs the risk of being liquidated.

Liquidations simply describe selling the collateral to recover the loan value. It’s often in borrowers’ interest not to let that happen. They can either decide to top up collateral whenever they run the risk of liquidation or pay down their loans.


A vital element of any defi protocol that monitors prices of assets is, how do you reliably get these prices? Burrow currently relies on whitelisted oracles, operated by five different entities. Eventually, this can easily be extended to a more decentralized, self-sustainable network where all participating oracles have to vote on prices in a tight range. Only when approved, would they feed into the protocol. The team is also considering adding oracle services supported on NEAR like flux in the future.

Burrow DAO

The Burrow DAO makes all the decisions on how the protocols evolve and what happens with the treasury. They rely on the Sputnik and AstroDAO framework, which provides flexible solutions for DAO in the NEAR ecosystem. Structurally, the DAO consists of:

  • Council of 5 people who can create proposals and vote on them
  • The community board consists of 15 community members that vote.

Once a big part of the native protocol token BRRR has been distributed to the community, Burrow will likely add a token holder role to replace the community board.


BRRR, the native governance token, has a total supply of 1 billion. 50% of that are going to the community through various initiatives, 20% will form part of the DAO treasury, 20% are allocated to the core team, and 10% are sold to strategic investors.

The first four weeks after distribution, BRRR is non-transferable until the DAO votes to activate that function. They are doing this to ensure the alignment of incentives. No one likes people to dump. Later, Burrow will introduce a staking feature, where users will stake tokens to vote, a mechanism already used in protocols like Curve.

Overall, Burrow seems to be doing pretty well. When I last checked, it had net liquidity of $58.37 million and paid over $9000 in rewards for liquidity mining.

If you supply assets to the protocol now, you’ll be eligible to receive BRRR rewards. Of course, this isn’t financial advice. If you are more like me and don’t want to borrow because you don’t need that leverage in your life, you can still deposit a stablecoin and earn interest on that, up to 8.9%. You can check all the rates here.

Just don’t forget that DeFi is still risky; you never know what smart contract risks there are or if any bad debt is in the system. So act accordingly — try responsibly, not with your life savings, nor with someone else’s.

I also just read on Twitter that Burrow is sponsoring the NEARcon opening night. So I shall try to find someone from the team and ask them a bit more about their protocol.

So long.