Borrow Flow

Borrowers can originate fixed-duration loans using funds from Pool deposits, collateralized with an NFT supported by the Pool. The maximum principal of a loan and interest rate are dictated by the deposit ticks used, which is described in more detail in the Liquidity Ticks section. Borrowers can later repay their loan at any point with a prorated repayment, and recover their NFT collateral.

Pools can be configured with various Collateral Filters, to further specify a subset of token IDs allowed by the Pool. Additionally, Pools support borrowing against bundles of NFTs using Collateral Wrappers, which extends the collateral supported by the Pool beyond a single NFT collection to various wrapped forms. This feature is also used to provide indirect support for ERC1155 collateral.

Borrowers can choose to refinance their loan at any time, also with proration, subject to the availability of deposit funds. Refinancing will result in a cash-in or cash-out transfer, depending on the difference between new loan principal amount and previous loan's repayment amount. In cases where depositors have redeemed the underlying funds used in a loan, borrowers may only be able to perform a cash-in refinance for a lower principal, or may not be able to refinance at all.

When a loan matures without repayment and is in default, any external actor can liquidate the loan, which transfers the associated collateral to the Pool's configured collateral liquidator for liquidation. Currently, this liquidation process is an English Auction. Proceeds from the liquidation are used to repay the deposit ticks that funded the loan. If the liquidation results in a surplus beyond the defaulted loan repayment amount, the surplus is remitted to the borrower.