Peer-To-Pool Lending

Isolated-Margin NFT Loan Market Coming Soon

Peer-To-Pool Lending is an ideal solution for NFTs 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.

Peer-To-Pool Lending will soon be live. Stay tuned to our social announcement.

Core Mechanism

Paddle’s Peer-to-Pool Lending is an isolated-margin NFT loan market that offers permissionless and transparent financial services to NFT communities. Similar to Aave or Compound, it enables users to borrow and repay capital at any time with open-ended loan durations, but with a model specifically tailored for NFT-based liquidity.

Isolated-Margin Design for NFT Communities

Each lending pool is isolated by NFT collection and settlement asset—ensuring that capital suppliers are only exposed to the projects they believe in, while significantly reducing systemic risk. Every pool has its own set of parameters, such as:

• Accepted Collateral

• Collateral Factor

• Interest Rate Model

For example:

• If you’re a supplier in the Steady Teddys / WBERA pool, only Steady Teddys holders can borrow WBERA using their NFTs.

• Yeetard holders would interact exclusively with the Yeetard / YEET pool.

This segmentation helps protect lenders while providing tailored access to liquidity for individual NFT communities.

Isolated Roles for Lenders and Borrowers

To reduce confusion during the initial phase of our money market launch, each wallet can only act as either a borrower or a lender in any single pool.

Example: If you deposit your Steady Teddys NFTs into the Steady Teddys / WBERA pool as collateral (borrower role), you won’t be able to supply WBERA to that same pool as a lender — and vice versa.

Flexibility:

• You can still be a lender in one pool and a borrower in another.

• If you want to both lend and borrow in the same pool, simply use two separate wallet addresses.

Once the market matures, this restriction will be lifted, and users will be free to act as both lender and borrower within a single pool.

Per-Market Risk Calculation & Liquidation

Paddle uses a per-market risk model, meaning each lending market (based on NFT collection and settlement asset) is assessed independently. The system calculates debt and collateral value separately for each market, so your positions in one pool do not affect those in another.

If the borrowing in a specific market exceeds the allowed limit, the collateral in that market becomes eligible for liquidation—regardless of your other holdings.

Example:

If your loan in the Steady Teddys / WBERA market exceeds the borrow limit, your Teddys NFTs in that pool can be liquidated—even if you have other NFTs (like Yeetards) deposited as collateral in a different pool. Those Yeetards will not be used to protect your Teddys position.

This structure keeps risk contained, ensures precise liquidation logic, and protects users from cross-market contagion.

Borrow Limit of certain market = Σ Amount of Collateral i x Price of Collateral i x Collateral Factor of Collateral i

Collateral Treatment

For Peer-To-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.

Advantages of Peer-To-Pool Lending

• Quick Loan Access: The streamlined process allows for fast loan issuance.

• Open-Ended Loan Durations: Users can borrow and repay capital at any time as long as the Borrow Limit Used does not exceed 100%.

• 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.