Bonzo Finance Questions Answered
Everything you need to know about using the Bonzo Finance platform — from making your first deposit to managing risk across several positions. You can also visit the platform overview page for background on how Bonzo Finance was built.
What is Bonzo Finance and what does it do?
Bonzo Finance is a non-custodial lending and borrowing protocol built on the public Hedera network. Users deposit supported tokens to generate yield, while others borrow against provided collateral. The protocol manages interest rates algorithmically — rates adjust based on how much of each pool is in use at any given time. No one controls your funds directly. Smart contracts hold everything, and positions update in real time as market conditions evolve.
Which assets can I supply or borrow on Bonzo Finance?
The protocol currently supports HBAR, HBARX, USDC, WETH, BONZO, SAUCE, XSAUCE, KARATE, DOVU, GRELF, PACK, STEAM, HST, and KBL. Each asset carries its own supply cap, borrow cap, and collateral parameters defined by governance. Certain tokens — STEAM, HST, and KBL — are presently in a frozen state, meaning existing borrowers may still repay but new supply and borrow positions cannot be opened for those assets. The complete list with live rates is available on the main app page.
How do I connect my wallet and begin supplying?
Click the "Connect" button in the top-right corner of the interface. Bonzo Finance supports Hedera-compatible wallets. Once connected, head to the All Assets table, locate the token you wish to deposit, and click the action button in that row. A modal will appear prompting you to enter an amount. After confirming the transaction in your wallet, your supplied balance will show up in the Supplied section at the top of the page. Interest begins accruing right away — there is no lock-up period.
What is the difference between Supply APY and Borrow APY?
Supply APY is what you earn as a lender. Borrow APY is what you pay as a borrower. Both are variable and shift continuously based on utilization — meaning how much of the total supplied amount is currently borrowed. When utilization is low, rates remain affordable. Push utilization toward 100% and both rates climb steeply, designed to attract new suppliers and encourage borrowers to repay. At any point the borrow rate will always exceed the supply rate; the gap funds the protocol reserve.
What are Bonzo Points and how do I earn them?
Bonzo Points are a loyalty rewards system running alongside the standard APY. Supplying and borrowing eligible assets accumulates points over time. The BONZO asset row displays a sparkle badge next to a boosted APY figure — that reflects the combined value of base yield plus point rewards. Points earning is currently active across the protocol. The Points dashboard, accessible from the top navigation, shows your total accumulated points and rank. Terms governing points redemption are published separately in the Bonzo Points Terms & Conditions document.
How does collateral work, and what is a loan health factor?
When you supply an asset accepted as collateral, you can borrow other tokens up to a percentage of your collateral value — referred to as the Loan-to-Value ratio. Each asset has its own LTV ceiling. Your health factor is a single number indicating how secure your position is: above 1 means you are safe; drop below 1 and liquidators can intervene. Health deteriorates when collateral value falls or your debt value rises. Keeping an eye on this number is important — a sudden price swing can narrow the gap faster than you might anticipate.
What happens during liquidation, and can I avoid it?
If your health factor drops below 1, any third party running a liquidation bot can repay part of your debt in exchange for a portion of your collateral at a discount. You end up losing more value than if you had repaid on your own. To avoid liquidation, either repay some of your borrowed amount or add more collateral before the health factor becomes critical. The Bonzo Finance documentation includes a dedicated section on liquidation bots for those interested in running one. Becoming a liquidator is a way to profit from at-risk positions while helping keep the protocol solvent.
Is Bonzo Finance audited, and how safe are the smart contracts?
The Bonzo Finance team has completed security reviews as part of launching on Hedera mainnet. Smart contract risk is present in any DeFi protocol — no audit removes it entirely. The protocol is non-custodial, meaning the team cannot directly access user funds. Parameters like supply caps and freeze states are governance-controlled mechanisms that limit the impact if something goes wrong with a specific asset. Users are encouraged to review the full documentation, examine the audit reports published by Bonzo Labs, and only deposit what they can afford to lose. Nothing in DeFi is without risk.
Can I supply an asset without using it as collateral?
Yes. Some assets on Bonzo Finance are accepted as collateral and some are not — this is determined per asset by protocol governance. If you supply a non-collateral asset, you still earn supply APY, but that balance does not increase your borrowing power. Conversely, if you prefer not to have your collateral-eligible deposit counted toward your borrow limit for risk management purposes, the protocol interface includes a toggle to disable collateral for specific supplied positions. Disabling collateral reduces your total borrowing capacity but can protect deposits you wish to treat as savings only.
What are flash loans and who are they for?
Flash loans allow developers to borrow any available liquidity from Bonzo Finance pools with zero collateral, provided the full amount plus a fee is returned within the same Hedera transaction. They are atomic — if repayment fails, the entire transaction reverts. Flash loans are primarily useful for arbitrage, collateral swaps, and self-liquidation. They require writing smart contract code. The Bonzo Finance developer documentation covers the flash loan API and includes example use cases. Everyday users interacting through the standard interface will not encounter flash loans during typical supply or borrow operations.
How does utilization affect the interest rates I see?
Each asset pool on Bonzo Finance has an interest rate model with a kink — a target utilization point, often around 80%. Below the kink, rates climb gradually as more of the pool gets borrowed. Cross the kink and rates rise sharply to signal that the pool is nearly exhausted. This mechanism protects suppliers: when almost all liquidity is borrowed, new suppliers are rewarded with higher yields, while borrowers face increased costs that encourage repayment. The utilization percentage is shown in the All Assets table for every token.
Why does the BONZO token have a boosted supply APY?
BONZO is the native token of the protocol. The team has structured additional point incentives on top of base supply yield for this asset to encourage deeper liquidity. The sparkle badge visible in the Supply APY column reflects rewards that accumulate as Bonzo Points rather than purely as compounding token yield. Think of it as a promotional layer on top of the standard rate model. The base APY and the points APY are separate — check the detailed row breakdown to view both figures side by side. Visit the project page for more on how the BONZO token fits into the broader protocol design.
How do I repay a borrow position?
Open the Borrowed section at the top of the app. Each borrowed position has an action button. Click it, choose Repay, and enter the amount. You can repay any portion — full repayment closes the position entirely. Interest accrues continuously, so if time passes between initiating a transaction and confirming it, a small amount of additional interest may be owed. The interface displays a maximum repayment figure that accounts for this. Ensure you hold sufficient balance of the borrowed token in your wallet before proceeding.
Can I use Bonzo Finance if I am new to Hedera and have no HBAR?
Hedera transactions require a small amount of HBAR to cover network fees. Without any HBAR, you will be unable to submit transactions. New users should obtain a small quantity of HBAR first — enough to cover a handful of transactions. Bridges listed in the platform navigation can assist with moving assets from other networks to Hedera. The Chainlist resource linked in the footer helps configure wallet RPC settings for Hedera. Once you have a funded Hedera account, connecting to Bonzo Finance and supplying your first asset takes only a few clicks.
Where can I check if Bonzo Finance or Hedera is experiencing issues?
Two status pages are worth bookmarking. The Bonzo Status page at status.bonzo.finance tracks protocol-level incidents and maintenance windows for the Bonzo Finance platform specifically. The Hedera Status page at status.hedera.com covers the underlying network layer — if Hedera itself experiences degraded performance, all applications built on it will be affected regardless of their own systems. Hashscan is a useful block explorer for confirming whether a transaction actually landed on-chain when the interface is slow to update.
Still have questions? Check the full documentation or reach the team on Discord.
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