Frequently Asked Questions (FAQs)
Does my loan go into default when the loan LTV exceeds the liquidation LTV? No, under normal circumstances, the loan will only go into default if the borrower does not pay back or extend/roll-over the loan before the end of the loan term. Taking out a loan using PNPL, is the liquidity coming from Pine Protocol or from an available pool that is setup? The liquidity always comes from individual lenders in which they set up an active pool for, meaning even you could connect your wallet today and set up your own pool within 3 minutes for any NFT Collection listed on OpenSea or LooksRare! See the full list of pools here: https://app.pine.loans/pools What happens when a user pays back his/her loan obligation? Borrower can pay back any portion of the loan obligation any time, which includes the loan amount and any interest accrued. When the full loan obligation amount has been repaid, the borrower regains full ownership and access to the NFT collateral in the Pine Wallet.
What happens to airdrops on my NFT while it's open under a loan? Borrowers are eligible to receive their airdrop once they repay the loan! Updates are planned to make this more clear for users on how to claim. In the meantime if you notice you have an airdrop be sure to open a support ticket in our Discord.gg/PineProtocol
What happens when a user DOES NOT pay back his/her loan obligation? The loan obligation goes into default when the borrower fails to repay the loan, according to the terms of the loan or when the LTV exceeds the liquidation LTV. In this case, the lender gains full access to the NFT collateral in the Pine Wallet.
What is the Loan-to-Value (LTV) ratio on Pine? The Loan-to-Value ratio (LTV) will vary depending on the collection and terms set by the lender. For safety considerations, Pine’s LTV ratios are set conservatively in the 30-50% range.
How does a liquidation happen? 1. Liquidation occurs when the borrower fails to Repay or Extend their loan within the accepted Tenor agreement as seen on the Repay Before date: 2. In this case the Lender will be granted the possibility to take possession of the NFT by withdrawing it from the loan smart contract. How is the valuation calculated? The value of NFT is calculated using min(7-day average transaction price, collection floor price) obtained from OpenSea via its API.
Are there any fees incurred with Pine Loans? Yes there is a small fee incurred, often negligible. Check out Protocol Fee for all the details. What about gas fees? Gas fees are expensive on Ethereum and there is not much we can do about that until further upgrades to the network. Luckily, we have implemented certain gas saving measures so that part of the gas fees will be refunded to you when you repay the loan. What currencies does Pine support? Users are able to take out loans in ETH (Ethereum) and MATIC (Polygon). Other currencies will be supported in the future soon! Can I borrow if my pledged collateral is currently listed on a marketplace, such as OpenSea or LooksRare or x2y2? Yes, you can still borrow on Pine even if your NFT is listed on OpenSea or LooksRare.
How is the loan amount calculated? Is it risk adjusted? Max loan amount = valuation * LTV - For valuation, we take floor prices from OpenSea and LooksRare and add some smoothing to make the price even more conservative - LTV is set by the lender, we typically see 30-50%
How do I calculate how much Interest I have to pay? The Interest Rate is based on the Actual/360 date count convention as indicated on the Loan Parameters page. Let's take an example taking out a loan for 5 ETH on a pool with 10% Interest Rate. The Tenor (final repay date) is less relevant as you can repay at any time during the loan and the interest rate is only calculated until you actually repay or extend the loan. To calculate the daily accumulated interest that needs to be paid we are going to divide the 10% of 5 ETH (= 0.5 ETH) divided by 360 days (0.5 / 360) = 0,00139. This means for every day that the loan is open, roughly 0,00139 ETH will be calculated on the repay date or extension of the loan.
What are the benefits of repaying early or repaying early partially? Lower interest cost, however keep in mind that our new fee structure will charge an early repayment fee. See all information here: https://docs.pine.loans/pine-protocol/protocol-fee
After repaying/borrowing, my NFTs are not moved to the other page (NFTs/Open Loans). Why? We are using Moralis https://moralis.io/ to index your NFTs, this may take a few minutes. Refresh the page after 5 minutes to see the actual status.