Borrowers

Borrowers Overview

Borrowers are individuals or entities that seek to obtain a loan using a decentralized finance (DeFi) platform. They follow a series of steps and adhere to specific terms when engaging in the loan process. Below is a simplified overview of the borrower's responsibilities and the fee structure they must be aware of.

Loan Request

To initiate a loan, a borrower submits a request specifying:

• Token Type: The cryptocurrency token they wish to borrow.

• Amount: Decided by the platform based on collateral.

• Collateral: An NFT (Non-Fungible Token) provided as security for the loan.

• Duration: The time period for which the loan is needed.

• Deadline: The latest date by which the loan must be accepted by a lender.

Loan Cancelation

• Cancel Loan: Borrowers have the right to cancel their loan request provided it has not yet been accepted by a lender.

Loan Repayment

Upon obtaining a loan, the borrower must repay as follows:

• Loan Amount: The principal sum borrowed must be returned.

• Lender's APR: Annual Percentage Rate set by the lender, applied to the loan amount over the agreed period.

• Protocol Fee: An additional fee charged by the protocol, calculated as the difference between the Borrower's APR and the Lender's APR.

• Repay Grace Fee: If applicable, an extra fee charged for payments made during a specified grace period.

• Early Repayment Penalty: If applicable, a fee incurred for repaying the loan prior to the agreed deadline applicable.

• Origination Fee: A fee determined by the percentage of the initial loan amount, adjusted based on the size of the loan.

Fee Distribution

The fees collected through the lending process are allocated as follows:

• Governance Treasury: Receives the Protocol Fee, Repay Grace Fee, Origination Fee, and any Early Repayment Penalty.

• Lender: Receives the repayment of the borrowed loan amount plus the agreed Lender's APR.