Crowd Lending

Coming Soon

Crowd Lending at Paddle Finance is inspired by the concept of a syndicated loan. It is designed to accommodate both small investors, who may not have sufficient capital to engage in Peer-to-Peer (P2P) lending, and larger investors or institutions seeking efficient ways to initiate loans with substantial principal amounts. By employing a crowdfunding approach, Crowd Lending allows multiple participants to voluntarily engage in a transaction, significantly lowering the barriers for lender participation and enabling high-value collateral loans.

Crowd Lending will soon be live. Stay tuned to our social announcement.

Collateral Treatment

Same as Crowd Lending, borrowers are not required to immediately deposit their collateral assets into the smart contract; instead, they simply need to authorize the transfer through MetaMask or another non-custodial wallet. The collateral assets are only transferred to the secure vault after a lender has successfully filled the loan.

If a borrower moves their assets out of their account before the loan is filled, the lender will be unable to complete the loan order, resulting in an error message indicating that the loan cannot be filled due to the absence of the required collateral. This process ensures secure and user-friendly collateral handling, minimizing upfront commitments until the loan terms are met by a lender.

Once the loan is repaid, the borrower can redeem their assets from the secure vault.

Loan Terms

Customizable Items

• Collateral: Borrowers can choose to secure loans with single assets (such as ERC-20 or ERC-721 tokens) or a basket of assets.

• Loan Currency: The type of token the borrower wishes to receive from the lender.

• Loan Amount: The principal amount needed by the borrower.

• Duration: The time period for which the capital is needed.

• Interest & APR: The interest rate the borrower is willing to offer. The final interest payment is calculated based on the principal, the annual percentage rate (APR), and the actual duration of the loan.

• Expiration: The duration for which the loan offer will remain valid in the market.

• Loan Mode:

  • FCFS Model (First Come, First Serve): Lenders contribute any amount until the funding cap is reached.

  • Subscription Model: Lenders contribute within a specific timeframe. Over-subscriptions are allowed, and allocations are proportionally divided among lenders based on their contributions. Fundraising remains open until the designated period ends.

Pre-Set Items

• Margin: A platform fee, calculated as a percentage of the principal, is deducted when a loan is filled by a lender. For example, with a 1% margin on a loan of 100 BTC, the borrower receives 99 BTC. However, the interest is calculated on the full 100 BTC, and the borrower must repay the entire principal plus interest by the loan's due date.

• Lender Fee: A fee calculated as a percentage of the interest is deducted upon repayment. For example, if 100 BTC interest on a 1000 BTC principal is due, lenders will receive 90% of the interest (90 BTC), totaling 1090 BTC.

• Repayment Method:

  • Lump Sum Payment: Currently, the only repayment method where the borrower pays back the entire principal and interest in one single payment.

  • On The Fly (Coming Soon): Allows the borrower to make payments at any time as long as the full amount is repaid before the due date.

  • Installment Plan (Coming Soon): Borrowers can split the repayment into several terms, similar to a mortgage. This method reduces default risk and facilitates higher-value collateral loans and institutional-grade lending within the BTC ecosystem.

Interest Calculation

Repayment Amount = Principle + Actual Loan Duration/365 x APR x Principle

Liquidation

If a borrower fails to repay the loan by the due date, the collateral becomes the property of the lenders. The process for liquidation varies depending on the type of collateral involved:

ERC-20 Tokens:

• At the time of liquidation, any remaining collateral that can be distributed is calculated based on the repayment ratio provided by the borrower.

• This remaining collateral is then allocated among the lenders according to their contribution ratios.

ERC-721 Tokens or Other Non-Fungible Tokens (NFTs):

• Liquidation for these assets begins with a liquidation auction.

• Liquidation Auction: This is a closed auction open only to the lenders and Paddle Gold Pass holders. The highest bidder wins the auction.

  • If the auction is successful, the proceeds from the auction are distributed among the lenders, based on their contribution ratios.

  • If the auction fails, the process moves to a liquidation sale.

• Liquidation Sale: The collateral is offered for sale on a secondary market, open to anyone. The selling price decreases daily until it approaches zero.

  • The funds obtained from the sale are then distributed to the lenders, according to their respective contribution ratios.