Liquidators

The guide provides crucial information for liquidators, who play a vital role in loan liquidation by settling overdue loans and taking possession of the non-fungible token (NFT) collateral. Here is an outline of the main points:

Key Responsibilities in Liquidation Process:

• Paying Off Overdue Loans: Liquidators are responsible for repaying the outstanding loan amount.

• Acquiring Collateral: Upon settling the loan, the liquidator receives the NFT used as collateral.

Requirements for Liquidation

The liquidation process necessitates the repayment of the original loan amount, alongside interest calculated based on the loan's duration and a predefined rate (Lender's APR). Additionally, borrowers are subject to a slightly higher APR that encompasses the Lender's APR plus a Protocol Fee. This Protocol Fee represents the difference between the borrower and lender APRs and is allocated to the Governance Treasury, ensuring the sustainability and governance of the lending protocol.

• Loan Amount: Repayment of the original loan amount is mandatory.

• Lender's APR: Interest based on the loan's duration and predefined rate.

• Borrower's APR: Includes Lender's APR plus a Protocol Fee.

• Protocol Fee: The spread between Borrower and Lender APR, contributed to the Governance Treasury.

Fees Incurred During Liquidation:

• Origination Fee: This is computed as a percentage of the total loan and accounts for the cost of processing the loan.

• Liquidation Fee: Also a percentage of the loan value, which gets charged when a loan defaults and is liquidated.

• Repayment Obligation: Must cover the original loan sum.

• Interest Payments: Both the interest rate agreed with the lender and additional fees must be met.

Distribution of Collected Fees:

• Governance Treasury: Receives fees collected from the Protocol, Origination, and Liquidation.

• Lender's Compensation: The lender is made whole by receiving the original amount lent plus the agreed-upon interest.

The guide ensures liquidators understand their financial responsibilities and the structure of fees associated with loan liquidation. It also details the flow of money—from the repayment of loans and interest to the distribution of various fees. This ensures a transparent and efficient liquidation process.

Liquidator's Guide to Loan Liquidation

Liquidators can intervene to pay off overdue loans, acquiring the NFT collateral.

Requirements for Liquidation

• Loan Amount: Repayment of the original loan amount is mandatory.

• Lender's APR: Interest based on the loan's duration and predefined rate.

• Borrower's APR: Includes Lender's APR plus a Protocol Fee.

• Protocol Fee: The spread between Borrower and Lender APR, contributed to the Governance Treasury.

Fees Associated with Liquidation

• Origination Fee: A scaled percentage based on the loan amount.

• Liquidation Fee: A set percentage of the original loan amount.

Allocation of Fees

• Fees such as the Protocol Fee, Origination Fee, and Liquidation Fee are directed to the Governance Treasury.

• The Lender receives both the Loan Amount and the Lender's APR.