Detailed lending process
How to use the Banx protocol as a lender
Last updated
How to use the Banx protocol as a lender
Last updated
The lender places a SOL offer in the order book for a given collection
This remains here until a borrower takes the offer
Refinancing auctions allow lenders to immediately enter a loan by taking over an existing loan that has received a refinancing call
This allows you to start earning interest immediately, compared to SOL offers waiting in the order book for borrowers
Interest begins to accrue linearly, every second
When the borrower repays, the lender recovers the principal and interest accrued at that particular moment
A lender can send a refinancing call to an active loan, at any given time
What happens next will be determined by the offers in the order book
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 accrued and exit
The new lender will enter the loan from scratch
If the order book contains no better or matching offers, the loan is sent to the refinancing auction
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
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, now at a higher interest, and can still repay anytime
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 does not recover the principle or interest owed
Instead the lender receives the collateral
