💸Loans
A loan consists of the following parameters:
Asset Type (principal, collateral, interest): Please go to Borrowing Options and/or Collateral Options for the full list of current assets. Longer term, we are invested in bringing additional, niche collateral options to the lending and borrowing space.
Amount to be Borrowed: We have no minimum or maximum limit, so plenty of opportunities.
Duration: 30 days to 300 days. We work on 30 day terms (1 term) up to a maximum of 300 days (10 terms).
Interest Rate: 2% - 12% Interest rates you set are based on the full term of the loan. Eg. 5% for 90 days (3 terms)
Accepted Interest Assets: These are the assets we accept as payment of the interest a borrower repays. To check which assets these are, check the Borrowing and Collateral Options pages.
Liquidation collateral value: 120% - 130% This is the level that, as a borrower, your collateral is at risk of liquidation. See v2 updates.
Accepted Collateral Assets: See Collateral Options These are the accepted assets you can use to borrow against.
Lenders list their offered loans on the platform. The lender defines these base parameters of a loan in a Loan Configuration.
Borrowers can take a loan by providing the required collateral. Fees are automatically paid when taking a loan. To prevent accidental liquidation of a loan, borrowers are required to supply an additional 10% initial collateral.
Given the following loan example:
Asset Type
ETH
Amount to be Borrowed
5 ETH
Duration
60 days
Interest Rate
5%
Accepted Interest Assets
USDC
Liquidation collateral value
120%
Accepted Collateral Assets
ARB
The borrower should provide collateral of 120% + 10% of the value of 5 ETH, in order to receive the loan of 5 ETH.
The lender requires the borrower to provide this collateral in ARB, but interest payments must be made in USDC.
Given a fictional current value of 1 ETH = $2,000 and 1 ARB = $1, the borrower provides the following collateral based on a $10,000 loan:
10,000 ARB - $10,000
100% core collateral
2,000 ARB - $2,000
20% liquidation collateral
1,000 ARB - $1,000
10% collateral buffer
$14,000 Total
Allows borrower $10,000 (minus platform fee)
Borrowers can add and remove collateral at any point in time, as long as the total remaining collateral is at least the liquidation collateral plus safety collateral. The safety collateral protects the borrower from being liquidated due to short-term price changes. You may decide you want to over collateralise more than this if you are not able to keep a close check on your the markets and your collateral ratio.
The loan is split into 10 ERC1155 loan shares, of which the holders get their respective share of the future payments (and liquidation) completed on the loan. https://ethereum.org/developers/docs/standards/tokens/erc-1155
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