# Borrow Cap

## Utility <a href="#e6b5gtzedzi" id="e6b5gtzedzi"></a>

The borrow cap limits the amount of short side exposure the protocol is willing to take for a given asset. Maintaining a borrow cap is especially useful for assets that are more prone to price manipulation (high concentration / low liquidity level).

## **Methodology**

We’ll determine the borrow cap setting using the max trade size for a determined threshold for buy-side slippage.

For example, a threshold of 5% buy-side slippage could be used for every asset.