Loan Lifecycle
All loans on the Protocol are structured to be secured bullet loans and interest is accrued linearly when a loan is outstanding. Principal and all accrued interest are to be paid in one payment and the NFT Collateral will be released from the custody of the loan smart contract when the loan expires. The ownership of the NFT Collateral will be returned to the borrower contingent upon all the obligations of the borrower are met.

# LTV

## Current LTV

Current LTV is an important metrics that is measured for each loan throughout its lifecycle:
$Current LTV = (Principal + Accrued Interest) ÷ CollateralValue$

## New Loan LTV Limit

The LTV limit for a new loan is derived using the initial LTV limit set for the loan offer by the lender and the rollover LTV buffer set by the protocol:
$New Loan MaxLTV = Initial LTV Limit * (1-RollOverLTVBuffer)$
This buffer is only discounted from the max LTV limit for a newly initiated loan. It does not apply to the max LTV for loan rollover.

# Events

Time
Event
T - 24H
Notifications that loan will expire in 24 hours
T - 2H
Notifications that loan will expire in 2 hours
T
Loan expires - notifications that loan has expired and if current LTV is greater than or equal to Loan Recall LTV, the loan is immediately liquidable by the lender
T to T + 12H
Grace period for borrower to make a full repayment or rollover to avoid default and liquidation.
Late repayment charge applies during this period. See Protocol Fee for more information.
T + 12H
Loan becomes liquidable
72H after loan became liquidable
NFT belongs to Pine protocol if no liquidation done on liquidable asset by the lender

## Events of Loan Recall

If the current LTV of the outstanding loan exceeds the Loan Recall LTV at any point of time, the lender is allowed to recall the loan. When a loan is recalled, the borrower will be given 24 hour to either repay the loan in full or to repay partially so that the current LTV is below the Variable LTV Limit. Loan Recall is only applicable to loans that are using the standard valuation from the Pine Pricer. In other words, if the loan was initiated from a pool that uses custom valuation, the lender cannot recall the loan within the loan term. This is to protect borrowers from valuation manipulation which will lead to malicious liquidation attempts of their loan positions.

## Roll-over

Borrowers can enter into a new term loan agreement prior to expiry of the original loan at the prevailing market offer such that the repayment can be postponed without defaulting the loan. The roll-over can only be done if the current LTV of the loan is below the maximum LTV Limit of the lending offer which the loan will be rolled over into. If the current LTV is greater than the maximum LTV of all available lending offers, then the borrower must make some payment to reduce the LTV before he/she can roll over the loan.

## Events of Default

A default happens when full repayment of the loan is not made by the borrower before or by expiry or the loan is not renewed successfully at expiry. A grace period of 12 hour will be given to the borrower to repay the loan if the current LTV is below the Loan Recall LTV is not exceeded at expiry.

## Events of Liquidation

If the loan is not repaid within the grace period after loan expiry or if the LTV is higher than the Variable LTV 24 hour after Loan Recall, the loan will become liquidable and the lender is given the right to liquidate the NFT Collateral after settling the liquidation charge. The ownership of the NFT Collateral will be transferred to the lender after successful liquidation. If the lender does not perform any action 72 hours after a loan becomes liquiable, ownership of the NFT Collateral will be permanently remained under the Protocol.