4) Perpetual P2P loans
Table of content
Introduction
What are Perpetual P2P loans?
🟢 Loans with no set duration
🟢 Interest is linear and accrues daily
🟢 Users (borrowers & lenders) can monitor the health of their Loans at anytime, which is a ratio between the LTV of their active loan and the liquidity currently available in the offers for that collection
🟢 Borrowers can receive "repayment calls" from lenders gently asking to repay (part of) their debt
🟢 Starting two days after the beginning of the loan, lenders have the option to terminate the loan at any time, which then triggers a 24H long refinancing process:
1️⃣ Auto-refinancing of the loan using available offers in the order book
2️⃣ A refinancing auction during which other lenders can refinance the loan (if auto-refinancing was not available)
3️⃣ Default if
The borrower didn’t repay his debt during the 24H long termination period
No other lender decided to refinance the loan during the refinancing auction
Coming soon
🟢 Loans for which interest rate = function of LTV so
High LTV = high risk = higher Interest
Low LTV = lower risk = lower Interest
🟢 No more competition for the highest offer possible. Lower offers from safe lenders can also fund healthy loans from borrowers looking for lower offers at a more reasonable interest rate
Why Perpetual P2P loans?
✅ Refinancing feature is much appreciated by borrowers as most prefer to pay down a little over time versus full at expiration
✅ In parallel we expect many borrowers will take slightly more reasonable loans (between 50%-80% LTV) so they don't need to worry about repaying in just a few days and can benefit from paying lower interest rates
✅ Over the past few months most lenders got rekt by the unhealthy competition to fund very high LTV loans. Our perpetual P2P loans will offer them more flexibility by enabling them to:
Terminate loans at (almost) any time
Fund more reasonable/healthier LTV loans
✅ A strong added value of such refinancing auctions is that the lender can see the NFT they are refinancing, which is a strong advantage compared to order book or AMM bids
For borrowers
How does it work?
Can take P2P loans with no fixed duration so they can repay after 1D, 7D, 30D, …
Can progressively repay over time and interest accrues daily
Can monitor the health of their Perpetual P2P loans at anytime, which is a ratio between the LTV of their active loan and the liquidity currently available in the loan offers
Can receive "repayment calls" from lenders gently asking them to repay (part of) their debt
Will receive notifications when the health of their loans decreases and when the lender decided to terminate the loan
Two days after the beginning of the loan (two days "safe period"), the lender can decide at anytime to terminate to loan. The borrower is notified and has the choice between
1) repaying (part of) his debt within the next 24H
2) letting his loan go through the 24H long refinancing process
2.1) Auto-refinancing: the loan will automatically auto-refinance itself in available offers 2.2) Refinancing auctions: if there is no offer in the order book to auto-refinance instantly, then the loan appears in the refinancing auctions page where all lenders interested in lending money instantly can decide to refinance the loan and become the new lender
*During the refinancing auctions, the borrower can repay part of his debt down to make it more attractive for new lenders to refinance it
3) Liquidation
In case the loan is neither repaid by the borrower or refinanced by new lenders then the collateral will get liquidated and go to the lender’s wallet
What are the benefits for borrowers?
No expiration
Linear interest accrual
Possibility to partially repay over time so loans remain healthy even if floor price is going down so lender will not terminate the loans or it will get refinanced
Can take low-mid LTV loans and keep them open
Can decide the LTV he wants (pro-mode). So if he takes reasonable LTV loans then his loans will most probably get refinanced over and over
Lower interest for lower LTV loans
Self refinancing loans is a safeguard in case borrower forgets to repay his healthy loans
How can I get liquidated?
IF lender decides to terminate your loan (which he can do two days after the beginning of the loan at the soonest)
AND IF no auto-refinancing offers are available
AND IF no new lender decide to refinance the loan during the 24H refinancing auction
AND IF you didn’t repay your debt within 24H after loan has been terminated by lender
🧠The lower the LTV of the loan taken by the borrower = the higher the health of the loan = the lower the probability the lender will terminate the loan = the higher the probability the loan will get refinanced by other lenders in case of termination by current lender
For lenders
lendersHow does it work?
Create offers with no fixed duration
Can monitor the health of his active loan in real time
While the loan is active, the lender can send "repayment calls” to the borrower gently asking them to repay (part of) their debt
At some point the lender might decide to terminate the loan because he wants his liquidity back or because this loan is becoming unhealthy/risky for him to keep it on (floor price decreased, because the borrower was not repaying progressively after repayment calls, …)
When the lender decide to terminates the loan it goes through this 24H long termination period during which
1) The borrower (who has been notified) can repay (part of) his debt
2) Refinancing process
2.2) Auto-refinancing: the loan will automatically auto-refinance itself in available offers
2.3) Refinancing auctions= if there is no offer in the order book to auto-refinance instantly, then the loan appears in the refinancing auctions page where all lenders interested in lending money instantly can decide to refinance the loan and become the new lender
3) Liquidation
In case the loan is neither repaid by the borrower or refinanced by another lender then the collateral will get liquidated and go to the lender’s wallet
Coming soon
The lower the LTV the lower the risk and the lower the Interest defined by the protocol
Define the loan value or LTV and the sees APY interest for this LTV
What are the benefits for lenders?
As he can terminate the loan any time he decides (after the two days "safe period") if it is going to be a 3D loan, a 7D loan, a 30D loan, …
Instead of your SOL waiting in the order book you can instantly start lending by refinancing loans available in refinance auctions, first come first served = better capital efficiency
A strong added value of such refinancing auctions is that the lender can see the NFT they are refinancing, which is a strong advantage compared to order book or AMM bids
Lenders are more protected than ever with other liquidity in order book and etc
Added peace of mind for lenders
No more healthy unsustainable competition to fund unhealthy loans
What is the health factor?
It is an indicator of the health of the loan based on
Loan value (current debt)
Current floor price
Current available liquidity in offers for that collection
If the loan looks underwater, the borrower will get notified so termination triggered by lender won't feel unexpected
Last updated