1. Lender Creates the Offer (Off-Chain)
The lender initiates the loan process by creating an offer off-chain.
2. Borrower Accepts the Offer
The borrower accepts the offer and sets the network fee.
A transaction is created that incorporates all lender inputs for the loan and the borrower’s collateral.
The network fee is deducted from the loan amount.
Since the loan transaction and collateral locking occur in the same transaction, this is an atomic operation. This means that either the loan starts and funds are sent with the collateral locking, or neither happens.
3. Lender Countersigns and Broadcasts the Transaction
The lender has 12 hours to countersign the loan and broadcast the transaction.
The loan timer does not start until the transaction confirms on the blockchain.
It’s important for the lender to check the unlock modal as the network fee may have changed since the borrower accepted the offer.
Note: Lenders do not pay a network fee.
4. Repayments
The loan repayment transaction must be initiated before the loan expires.
If a repayment confirms after the expiration, it is valid.
5. Liquidations
Liquidations can only be broadcasted once the time lock expires. After this, lenders can liquidate the loan.
6. Airdrops
Airdrops to the escrow belong to whoever ends up with the loan collateral.
Airdrops During the Loan: If an airdrop lands in an escrow during the loan, it will be unlocked in the same transaction as the repayment for borrowers. Lenders only unlock the collateral when claiming, so they will need to use the airdrop claim page to claim airdrops.
Airdrops After Loan Completion: Any airdrop that lands in an escrow that was already used for a completed loan (i.e., an old escrow that does not have collateral in it) can be unlocked at the airdrop-claim page.