Detailed lending process

How to use the Banx protocol as a lender

1. The lender places an order book offer

  • The lender places a SOL offer in the order book for a given collection

  • This remains here until a borrower takes the offer

2. The lender refinances a loan from auction

  • 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

3. The loan starts

  • Interest begins to accrue linearly, every second

4. The borrower repays the loan in full

  • When the borrower repays, the lender recovers the principal and interest accrued at that particular moment

5. The lender sends a refinancing call

  • 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

6. 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 accrued and exit

  • The new lender will enter the loan from scratch

7. 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

8. 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

9. A new lender takes the refinancing 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, now at a higher interest, and can still repay anytime

10. 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 does not recover the principle or interest owed

  • Instead the lender receives the collateral

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