Loan Parameters
Last updated
Last updated
Each lender on Pine protocol sets up their own segregated lending pool which is mapped to their wallet address on the blockchain. The lender can set how much digital currencies they would like to add to the pool and enable one or more NFT collection(s) as eligible collateral that they would like to lend against. For each collection, they would have to set up one or more loan offers. Every loan offer within an NFT collection has a unique tenor and a set of parameters for the loan terms.
The Pine pricer is the default valuation engine for NFT collections used as loan collateral on the protocol. Lenders do have the flexibility to customize the valuation by building their own pricer or plugging in a third party valuation engine.
See the “NFT Valuation” section for more information.
As all loans on Pine are fixed-duration loans, tenor represents the duration of the loan. To avoid the problem of liquidity being too fragmented, lenders can only choose from a set of standard tenors, which are currently 7 Days & 14 Days with each day being 24 hour with reference to the blockchain timestamp starting from the block on which the loan was opened.
The interest rate of each loan offer is stipulated on the lender’s active offer on the Offer Book and is agreed by the borrower upon successful execution of the relevant blockchain transactions in its entirety. All annualized interest rates on the Protocol adopt the Actual/360 date count convention.
The initial LTV limit set by the lender for each loan offer governs the maximum proportion of loan value a borrower can borrow against the valuation of the NFT collateral. For new loan, the maximum LTV limit is discounted further by the rollover LTV buffer set at the protocol level.
See the "Loan Lifecycle" section for more information.
Lender Bob opens a pool that supports 3 NFT collections as collateral
ERC-20 address: 0x37…E88A
Pool Size: 100 ETH
Besides the parameters set by the lender, there are a protocol-level few parameters that are governed by the PineDAO.
The parameters and their current values are
Rollover LTV Buffer
3%
Loan Recall LTV Threshold
95%
Liquidation Time Window
6 months
The rollover LTV buffer is a discount factor used to derive the maximum LTV for new loans. The idea is to reduce the max LTV for new loan slightly to give a buffer for the loan to be rolled over at below the maximum LTV set by the lenders for the loan offers. By setting the new loan max LTV lower than actual loan max LTV, given if the value of the NFT collateral remains constant and depending on the amount of interest accrued, borrowers should be able to rollover new loan positions a few times before any repayment is needed.
The Loan Recall LTV is in place to help lenders with risk management when the value of the NFT collateral drops tremendously. If the current LTV of the loan position exceeds the Loan Recall LTV during the term of the loan, lenders will have the option to recall the loan early. This threshold does not apply to any loan that is using custom NFT pricing that is not from the Pine Pricer.
The liquidation time window is the amount of time lenders have to liquidate, i.e. repossess the NFT collateral asset by withdrawing it from the loan smart contract, when a loan position becomes liquifiable.
See the "Loan Lifecycle" section for more information.
Collection 1: Bored Ape Yacht Club
Valuation: Pine Pricer
Offer 1: 7-Day - Interest Rate: 18% per annum - Initial LTV Limit: 40%
Offer 2: 30-Day - Interest Rate: 19% per annum - Initial LTV Limit: 40%
Collection 2: Doodles
Valuation: Pine Pricer
Offer 1: 14-Day - Interest Rate: 22% per annum - Initial LTV Limit: 35%
Collection 3: Clone X - X Takashi Murakami
Valuation: Pine Pricer
Offer 1: 7-Day - Interest Rate: 22% per annum - Initial LTV Limit: 40%
