Peer-to-Peer Lending
Last updated
Last updated
Ventory allows both lenders & borrowers to request and accept offers, which include LTV rate, duration, APY matching your desire. Offers then are sent to the Loan Queue. Loan Queue automatically provide you the best offers instead of the entire list. After the the loan is formed (offers accepted), borrower is able to either repay to get out of debt or extend the loan to find new lender while lender has the right to foreclose the loan if LTV rate exceed 90%. Foreclosing the loan directly triggers the Dutch Auction. Meanwhile, APY (borrowers pay) rise gradually in the next 36 hours following platform's algorithm (up to 1000%).
As a borrower, you own NFTs as collateral and are able to borrow against them by requesting for a loan. Loan Queue contains your offer & Loan Matching System will automatically find you the list of lenders. After a period of time, loans are matched and formed. You can track your loan condition to better act on time. Here come the situational options:
Borrower repays the loan on time before expiry date. Total repay includes borrowed funds and APY. After repayment, borrower get back their NFT.
When LTV exceeds 90%.
When LTV exceeds 90%, the loan is tagged "UNDERWATER". If Lender 1 forecloses the loan, Borrower has 6 hours to repay the loan to pull the LTV <90% before it gets listed for Dutch auction with gradually rising APY until there is a Lender 2 jumping in. Afterward, the loan is formed and repayment will be sent to Lender 1 (Borrowed Amount and APY included).
Example:
Repayment step as LTV > 90% and the loan is yet to expire.
A Borrower borrows 10 $STRK against an NFT (12 $STRK worth at LTV = 83.3%). The FP then falls to 10.5 $STRK (LTV = 95.2% > 90%) as the expiry date has not come. Lender 1 get notified and has 2 options:
If he does not call, the loan remains until expiry date.
If he does call:
The Borrower has 6 hours to repay > 0.55 $STRK to extend the loan (LTV > 90%) until the expiry date.
The Borrower doesn't repay after 6 hours, Lender 1 makes decision. Lender 1 can either receive the collateral (NFT) to close the loan or does not receive to send the loan to Dutch Auction. Dutch Auction lasts for the next 36 hours.
During Dutch Auction, the loan's APY will gradually increase (Up to 1000%) until there is a Lender 2 who's willing to jump in. If so, a new loan with a new APY (higher one) is created between the Borrower and Lender 2. Lender 1 claims the repayments (from Lender 2) and finishes his job.
If there is no Lender 2, after the Dutch Auction, Lender 1 will receive the collateral and the loan will be closed.
Borrower cannot repay the loan on expiry date. (LTV < 90%)
After the the loan has expired, Borrower has 6 extended hours to repay the total value of debts including borrowed amount and APY to close the loan and get back his NFT.
In the case that the Borrower doesn't repay after 6 hours, Lender 1 makes decision. Lender 1 can either receive the collateral (NFT) to close the loan or does not receive to send the loan to Dutch Auction. Dutch Auction lasts for the next 36 hours.
During Dutch Auction, the loan's APY will gradually increase (Up to 1000%) until there is a Lender 2 who is willing to jump in. If so, a new loan with a new APY (higher one) is created between the Borrower and Lender 2. Lender 1 claims the repayments (from Lender 2) and finishes his job.
If there is no Lender 2, after the Dutch Auction, Lender 1 will receive the collateral and the loan will be closed.
Once an NFT lending offer has been listed by borrowers, lenders can either accept loan offers or create a new offer against them. As a lender, your loan offers are binding, which means you cannot change your mind once you have accepted an offer. Once a loan offer is accepted, the loan is automatically executed. And as a Lender you can also track your loan condition to better act on time.
Lender can FORECLOSE the loans
Once LTV exceeds 90%, a notification will be sent in advance to remind lenders. You can either foreclose the loan or leave it remained and accept the risks. After the loan is auctioned in the upcoming 36 hours, if there is new lender, they will cover your borrowed fund and APY. Otherwise, you get the compensation as NFT with better price and the borrower keeps the fund.
