> ## Documentation Index
> Fetch the complete documentation index at: https://docs.40acres.finance/llms.txt
> Use this file to discover all available pages before exploring further.

# How it works

The mechanics behind self-repaying loans on 40 Acres.

## The Core Mechanic

Think of your collateral as a revenue-generating business. Every week, it earns fees and bribes from the DEX it votes on. 40 Acres lets you borrow against that future revenue today, and automatically uses each week's earnings to pay down your debt.

The simplest mental model: **your rewards are your repayment schedule**.

## Step by Step

<Steps>
  <Step title="Deposit your veNFT">
    Your asset is deposited into a 40acres smart contract and locked as collateral for the duration of the loan, subject to the protocol rules.
  </Step>

  <Step title="Borrow USDC">
    Your maximum loan amount is calculated based on your assets average weekly rewards multiplied by the epoch multiplier (currently 10 epochs). You receive USDC instantly from the lending vault.
  </Step>

  <Step title="40 Acres votes on your behalf">
    Your deposited asset is put to work immediately. The 40 Acres vote optimizer allocates your assets voting power to the highest-yielding pools each epoch. You can also vote manually if you prefer; as long as you vote on supported pools.
  </Step>

  <Step title="Rewards repay your loan">
    Each week at epoch flip, rewards flow in and are automatically applied to your loan balance. 75% goes toward repayment. 20% goes to lenders. 5% goes to the protocol treasury.
  </Step>

  <Step title="Reclaim your collateral">
    Once the loan is fully repaid, you can withdraw it from 40acres.
  </Step>
</Steps>

## Loan Sizing

Your borrow limit is calculated at origination:

```text theme={null}
Max Borrow = locked_amount × rewards_rate × epoch_multiplier
```

| Variable           | Description                                                               |
| ------------------ | ------------------------------------------------------------------------- |
| `locked_amount`    | Size of the asset                                                         |
| `rewards_rate`     | Average weekly rewards per unit of locked token (recalculated each epoch) |
| `epoch_multiplier` | Currently 10 — the number of epochs you can borrow against                |

The epoch multiplier will increase incrementally as the protocol grows and TVL deepens.

## What Happens If Rewards Underperform?

If your asset generates less than expected in a given epoch, repayment simply takes longer. The loan remains open and continues being repaid by whatever rewards flow in.

Your loan is repaid over time using rewards generated by your collateral, when available. Higher rewards may accelerate repayment, while lower rewards may extend it.

## What Happens If Vault Utilization Is Full?

New loans cannot be opened if vault utilization exceeds 80%. This protects lenders from overextension. Existing loans continue normally; repayments flow in and reduce utilization over time, reopening capacity for new borrowers.