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Protocol Highlights
Elements that make our protocol stand out
The main product of the protocol is to serve as a facilitating platform for Asset Back Loan borrowing and underwriting. Users will be able to pledge NFTs as collateral to meet their liquidity requirements while on the other hand to extract extra yield from their idle cryptocurrency cash.
Every lender sets up their own segregated lending pool on the Pine protocol instead of participating in commingled lending pools alongside with multiple depositors. This gives each lender flexibility to choose the types of collateral they would like to lend against and set their own terms. When a loan position defaults, the ownership of the collateral is transferred to the lender. There is no need for forced selling of the collateral as every loan and the underlying collateral is mapped to only one lender. Finally, lenders face less compliance and regulatory risk with the segregated pool structure as compared to a public lending pool where funds from multiple depositors are commingled.
Text | Segregated Pool | Commingled Pool |
|---|---|---|
Risk Assessment | Accurate | Blurry |
Control of Exposure | Lender | Protocol |
Ownership of Collateral | Defined | Vague |
Risk of Bank Run | Not at risk | At Risk |
All loans are structured as term loans on the Pine Protocol. This means that all loans on Pine have a fixed duration, e.g. 7 days. Lenders can offer multiple loan durations when setting up a lending pool for a specific NFT collection. Furthermore, lenders can also set different terms, i.e. LTV and interest rates, for different loan durations in order to manage the associated risk. The term loan structure makes it a lot easier for borrowers to manage their loan positions as everything, such as repayment date, total interest payable, etc are known and agreed upon on the onset when the loan is initiated. Under normal circumstances, borrowers face no liquidation risk as long as they repay or extend the loans before the end of the loan term.
Text | Term Loans | Continuous Loans |
|---|---|---|
Terms of Loan (e.g. interest payable) | Fixed at the start of term | Changes constantly |
Interest Rate | Fixed | Volatile |
Cash Flows | Predictable | Unpredictable |
Market-to-market Liquidation | No | Yes |
Risk of Protocol Insolvency | Low | High |
Last modified 6mo ago