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