Pool Lending
Coming Soon
Last updated
Coming Soon
Last updated
Pool Lending is an ideal solution for assets with high turnover rates and low risk, especially those with stable value and high transaction volumes. Utilizing a Liquidity Pool-based approach, Paddle Protocol enables rapid and efficient fundraising, allowing asset holders to secure loans quickly.
Pool Lending will soon be live. Stay tuned to our social announcement.
For Paddle Pool Lending, when a borrower initiates a loan request, the collateral assets are immediately deposited into a secure vault. This allows the borrower to access the funds right away. Once the loan is repaid, the borrower can redeem their assets from the secure vault.
Algorithmic Parameter Setting
In Pool Lending, all loan parameters are predetermined by Paddle’s algorithm to ensure uniformity, eliminating customization to provide a consistent and efficient borrowing experience that maximizes lender protection.
Collateral:
Only whitelisted assets are eligible for Pool Lending to ensure a straightforward liquidation process.
Basket collateral mixing different asset types, such as various NFT collections or BRC-20 tokens, is not supported.
Loan Currency: Determined based on the available liquidity in the pool.
Loan Amount: Calculated based on the preset Loan-to-Value (LTV) ratio and Floor Price (for NFTs) or market price (for ERC-20 tokens).
Duration: The duration is fixed and varies depending on the whitelisted asset involved.
Interest & APR: The interest rate is fixed upon the creation of the loan contract and is calculated based on the liquidity pool utilization rate.
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, liquidity pool 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.
Quick Loan Access: The streamlined process allows for fast loan issuance.
Income Opportunities for Lenders: Lenders earn interest and may benefit from excess asset resale.
Controlled Risks: The liquidity pool structure manages and mitigates lending risks effectively.
Unused funds may be staked in other protocols (e.g., Aave, Babylon, Pendle) to generate additional yield.
If the loan is not repaid by the due date, or if collateral value drops below a certain threshold, the collateral is sold on the secondary market at the highest bid. After the liquidity pool is repaid, a 10% penalty is deducted from the remaining amount, which is then returned to the borrower.
Paddle collaborates with reputable oracle services (e.g., Chainlink) to provide real-time price feeds for accurate collateral valuation.
