Frequently Asked Questions (FAQs)
What is Pine? Pine Protocol is a decentralized asset-backed lending protocol that allows borrowers to borrow fungible digital tokens from lenders using non-fungible tokens as collateral. What can a user do on Pine? The Pine protocol serves two groups of users: lenders and borrowers. Lenders set up and fund their own lending pools for different NFT collections and set their own terms for loan offers. Borrowers can choose from these offers and borrow digital currencies against them using their NFT assets as collateral. Using the protocol is permissionless on both ends. What is Pine’s mission? Our mission is to build and facilitate the adoption of technology that will bring asset-backed financing on-chain. As true believers in blockchain technology, we see a future where payment will be done in digital currencies and asset ownership will be represented by non fungible digital tokens (“NFT”). Our solution, the Pine Protocol, will be the smart contract infrastructure that will allow asset-back financing to be conducted more efficiently and transparently on the blockchains.
What experience does the team have? The Pine team is composed of contributors with extensive experience and expertise in blockchain technology, digital assets exchange, quantitative trading, software development, e-commerce and traditional banking. Where can I find your whitepaper? Please refer to: https://docs.pine.loans/ How secure is the Pine Protocol? The smart contracts of the Pine Protocol have been audited by Quantstamp and Nassec, but most importantly our investors also performed their in-house audits to ensure they are investing into a secure project. Do you have plans to expand to multiple chains? Our plan is to make sure to deliver the most robust protocol possible on the ETH chain before expanding into other L1s and L2s. When $PINE? Our TGE is planned for Q4 2022 - stay tuned! How can I connect with the team? The best way would be to visit our Discord: http://discord.gg/pineprotocol
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 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, the total fees are 0.01ETH + 0.35% of loan amount. 0.01ETH is the handling fee and 0.35% of the loan amount is the protocol fee. The handling fee is charged at loan origination, but not at subsequent rollovers. We expect to rollout a new fee structure in Q4, for all the latest details please refer to https://docs.pine.loans/pine-protocol/protocol-fee What about gas fees? Gas fees are expensive on Ethereum and we could do nothing about that. However, 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. Possible other currencies will be supported in the future. Can I borrow if my pledged collateral is currently listed on a marketplace, such as OpenSea or LooksRare? 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%
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 right now. They are a bit slow. Please wait a few minutes.
What is Pine Now, Pay Later (PNPL)? Pine Now, Pay Later is Pine’s innovative mortgage-like borrowing feature that enables users to buy an NFT with leverage using the NFT itself as collateral for the purchase. Think of it as a mortgage for a home. Once you fully repay the outstanding loan, you will have full ownership of the NFT.
Which collections are supported? Collections marked with a pink PNPL mark on https://app.pine.loans/ are supported.
How are the terms different from normal borrowing? There is no difference.
How to mitigate risk as Lender for volatile NFT Projects? You can set a shortened loan duration of 1 or 3 days if you think the current conditions are volatile and set a lower collateral percentage, meaning they can borrow much less than the usual 40% of LTV. We also plan to support additional features that will further mitigate risks as a Lender, for example by being able to recall a loan if the LTV drops below a certain threshold %. As a Lender, how much liquidity should I typically provide? You would need to look at the floor price, let’s say it’s currently 2 ETH. Take the LTV of around 50% which would be 1 ETH for that project. So a good start would be around 10 ETH’s which would allow around 10 loans (10 loans x 1 ETH = 10 ETH in the Lending Pool).