Detailed borrowing process

How to use the Banx protocol as a borrower

1. The borrower takes the loan

  • Fixed 1% protocol fee on the principal is applied

  • Interest starts accruing linearly, every second

2. The borrower repays the loan in full

  • The borrower repays: the principal, accrued linear interest and the protocol fee

  • The borrower recovers full control of their NFT

3. The lender sends a refinancing call

  • A lender can send a refinancing call to an active loan, at any given time. Reasons why may include:

    • The loan being unhealthy or displaying downward trending health

    • The loan being healthy, and the lender decides to claim the SOL owed

    • The lender does not want to support that collection any more

  • What happens next will be determined by the offers in the order book:

4. The order book can auto-refinance the loan

  • A healthy loan is more than likely to match an existing offer in the order book

  • If so, the loan will be auto-refinanced

  • The lender will recover the principal + interest and exit

  • The new lender will enter the loan from scratch

  • Nothing changes for the borrower, the loan keeps accruing linear interest every second

5. The order book cannot auto-refinance the loan

  • If the order book contains no better or matching offers, the loan is sent to the refinancing auction

6. The 72 hour refinancing auction starts

  • The loan will be offered to new lenders on the same terms

  • During this time the collateral cannot be liquidated

  • The borrower is able to repay if they want to

7. New lender refinances via the auction

  • Refinancing involves covering the principal of the previous loan and accrued interest, allowing the previous lender to exit in full

  • The borrower continues to borrow, and can still repay anytime

8. The refinancing auction ends

  • The auction ends after 72 hours if no new lender has stepped in to refinance the loan, and if the borrower still hasn't repaid

  • If this is the case, the lender receives the collateral and the borrower loses it

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