# How it works

Aqua Protocol offers a seamless process for using your TONCOIN or Liquid Staking Tokens (LSTs) to borrow AquaUSD, a stablecoin, which can be used in various DeFi activities. Here’s how it works:

### 1. Provide a Deposit:

* **Deposit TONCOIN or LSTs**: Start by depositing your TONCOIN or LSTs (such as stTon, tsTon, hTon, wlTon) into the Aqua Protocol. This deposit acts as collateral for borrowing.

### 2. Get AquaUSD on Credit:

* **Receive AquaUSD**: Based on your collateral, you can borrow AquaUSD from the protocol. The amount of AquaUSD you receive will be equivalent to 50% of the value of your deposited collateral. The minimum collateral ratio for minting is set at 200%.
* **Collateralization Percentage**: This 50% collateralization is necessary to maintain the protocol's security, considering the volatility of the cryptocurrencies used as collateral.

### 3. Use AquaUSD in DeFi:

* **Diverse Use Cases**: AquaUSD can be used for various purposes like exchanging into other coins or stablecoins, trading, hedging risks, providing liquidity, purchasing NFTs or another tokens, and more.
* **Gaining Leverage**: You also have the option to re-deposit AquaUSD into Aqua Protocol. This strategy can increase your leverage, potentially amplifying profits from liquid staking and benefiting from a rise in the price of Toncoin.

### 4. Repay the Loan to Retrieve Your Collateral:

* **Reclaiming Collateral**: If you wish to get your collateral back, simply repay the borrowed AquaUSD. Upon repayment, your collateral will be released and made available for withdrawal.

In summary, Aqua Protocol provides a straightforward and flexible way to leverage your TONCOIN or LSTs, allowing you to engage actively in the DeFi space while maintaining the opportunity to profit from your staked assets.


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