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Loan Parameters

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 a NFT collection has a unique tenor and a set of parameters for the loan terms.

Lenders Set Parameters

Valuation

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.

Tenor

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 1 Day, 3 Day, 7 Day, 14 Day and 30 Day with each day being 24 hour with reference to the blockchain timestamp starting from the block on which the loan was opened.

Interest Rate

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.

Initial Loan-To-Value (“LTV”) Limit

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.

Example of a Loan Pool

Lender Bob opens a pool that supports 3 NFT collections as collateral
ERC-20 address: 0x37…E88A
Pool Size: 100 ETH

Collection 1: Bored Ape Yacht Club

Valuation: Pine Pricer
Offer 1: 7-Day
  • Interest Rate: 18% per annum
  • Initial LTV Limit: 45%
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%

Protocol Set Parameters

Besides the parameters set by the lender, there are a protocol-level few parameters that are governed by the PineDAO.
As of September 2022, the parameters and their current values are
Parameter
Current Value
Rollover LTV Buffer
3%
Loan Recall LTV Threshold
95%
Grace Period Time Window
12 hours
Liquidation Time Window
6 months

Rollover LTV Buffer

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.

Loan Recall LTV Threshold

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. If this happens during the grace period after the loan has expired, the grace period will be terminated and lenders can immediately liquidate the loan. This threshold does not apply to any loan that is using custom NFT pricing that is not from the Pine Pricer.

Grace Period Time Window

The grace period time window is the amount of extra time borrowers are given to repay or extend a loan that has already expired before it goes into default and become liquidable.

Liquidation Time Window

The liquidation time window is the amount of time lenders have to liquidate, i.e. reposses 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.