FAQ | Orion

What happens if the value of my NFT declines below my borrowed amount during a loan?

Orion AI loans are UN-liquidatable! You will NEVER get liquidated while a loan is outstanding - you can borrow with peace of mind, just remember to repay or extend your loan before the due date!

Can I repay part of my loan before maturity?

Yes! Go to 'Current Borrows' to select the loan you want to repay. Once you select the correct loan, pick the duration you want your new loan to mature. In order to repay part of the loan, you will first need to check the 'Reduce principal to lower costs' box, then choose a custom amount that you want to leave outstanding. The difference in the original loan and the new amount is what you are prepaying.

If I repay my loan before maturity, do I have to pay all the interest?

No! You only pay interest pro rata from when your loan was outstanding. This means if you get a 30 day loan, but its only outstanding for 15 days, you will pay for 15 days of interest, not 30.

What if my loan is coming due, but I don't have enough money to repay the loan?

As long as there is capital in the pool, you can extend your loan at the most favorable terms offered by lenders. Let's say you borrowed 10 ETH on a NFT worth 20 ETH, and then lost the 10 ETH you borrowed. As long as there is capital in the pool at a price of 10 ETH per NFT when your loan comes due, simply extend your loan.

I let my loan default by accident, but the NFT was worth more than the loan! What happens now?

When a loan defaults, the NFT is immediately put up for sale via 24-hour auction. If the NFT sells for MORE than the principal plus interest of the loan, the excess proceeds will be RETURNED TO THE BORROWER.

Can I borrow against more than 1 NFT in a single transaction?

Yes! You can batch up to 32 NFTs of the same collection and borrow against them in a single loan.

What are Pools?

A basket of funds (made up many different lenders) used to originate NFT loans from a single collection.

What are the decisions I need to make when depositing capital?

The NFT collection
Max Price = highest price of the NFT you are comfortable lending at (think LTV%)
Max Term = longest duration loans you are comfortable lending to
Rate Tier = a target interest rate you are comfortable lending at (defaults to market)
Deposit Amount = how much capital you are comfortable lending

Is my deposit tied to a single NFT loan?

No! Your deposit will likely be exposed to many NFT loans within the pool for that NFT Collection. Whenever you have an active deposit, you should think of that as the risk tolerance you have right now for the NFT collection to which you're lending.

How do withdrawals work? Why do I have to enter a redemption queue before withdrawing?

Add to Queue = Your position is always active in the pool, whether the pool is utilized or not. Entering the redemption queue will move your funds into an inactive status, which will prevent it from participating in new loans
Withdraw = If there is enough cash, you will not have to wait to withdraw. However, if your funds are being utilized, you will have to enter the redemption queue above and wait until outstanding loans mature until you can transfer those funds into your wallet.

What happens when there's a default?

When a borrower defaults on a loan, MetaStreet puts the NFT up for a 24-hour auction. After the auction concludes, the principal and interest owed to the pool is returned starting from the lowest price (least risky Ticks).

If the NFT is sold for a value greater than the original borrowed amount, then the Borrower will receive the excess proceeds to prevent situations where a Borrower could have sold an NFT before defaulting to pay back the entirety of a loan.

I just deposited and it immediately showed negative earnings, what's going on?

In order to prevent Lenders from gaming the system by depositing and withdrawing at opportune times (i.e. right before maturity when interest is paid), Lenders "buy in" to the outstanding loans and over time the negative earnings will turn positive.

What is an LCT?

Liquid Credit Token, an ERC-20 representing a lender's loan position, which can be traded in secondary markets.

Where does the LCT yield come from?

Liquid Staking or Restaking Tokens
Interest from NFT-backed loans

How long do Auctions last?

Auctions begin as soon as a loan defaults, with the first bid triggering a 24-hour timer. Any bids made in the last 10 minutes of the auction will extend the bidding period by 15 minutes continuously.

How much more do I need to bid?

A new bid must be at least 2% greater than the prior bid.

What type of Auction format is used?

As a fully on-chain English Auction, each bid triggers a deposit of funds into the smart contract from the bidder, which reimburses the previously highest bid.