Borrowing
Every market has a board of open offers. Each one is a complete set of terms from one lender, and borrowing means taking one of them as it stands. There is no negotiation and no rate to accept later.
- Pick an offer; collateral goes in and the loan comes out in one transaction
- The due date, interest, late fee and collateral are fixed at that moment
- A loan is repaid in full, in one transaction, by the due date or within the grace window
- Anyone can repay a loan; only the loan token can claim the collateral back
- Repaying and claiming collateral are two separate steps
- Repay early: deadlines are real and transactions take time
Choosing an offer
| Column | What it tells a borrower |
|---|---|
| Available | How much of the offer is still on the table. Others may have drawn part of it already. |
| Collateral | Which token must be posted, and how much per amount borrowed. The interface shows the total for whatever amount is entered. |
| Interest | The flat charge over the term, as a percentage of what is borrowed. Not a yearly rate. The interface may also show a yearly equivalent for comparison. |
| Term | How long the loan runs, and the grace window that follows it. |
The board can be filtered by collateral token and by term, so a borrower holding only sNIGHT can see just the offers that accept it. No lender's name or address appears; every offer looks the same in that respect, and the choice comes down to terms alone.
What to weigh
- Total cost. Interest for the whole term, plus the late fee if repayment slips into the grace window. The borrow dialog shows both figures for the amount entered: Due on time and Repaid during grace.
- Collateral required. More collateral locks up more of the wallet for the term. Since nothing is ever sold or topped up, this is the whole exposure: the collateral comes back on repayment, or is lost on default.
- Term. A longer term is more time, and more interest. Because a loan cannot be repaid in parts or extended, picking a term that comfortably covers the need is better than picking the shortest one and hoping.
- Smallest borrow. Each market sets a minimum draw. A draw below it is refused unless it takes everything the offer has left. Minimum sizes.
Taking a loan
Borrowing is one transaction. The collateral goes in and the loan comes out at the same moment, and a loan token arrives with it. It needs a connected wallet holding the shielded collateral token the offer asks for and some DUST for the fee.
- On a market's board, choose Borrow on an offer.
- Enter the amount to borrow, up to what the offer has available. The dialog shows the collateral that amount requires, the due date, what is due on time, and what is due if repaid during the grace window.
- Choose Review. The review lays out the exchange (what is posted, what is borrowed) and Paying it back: the amount due on time, the amount due if late, and what the lender can take after that.
- Approve in the wallet. When the transaction confirms, the borrowed tokens and the loan token are both in the wallet.
Everything is fixed at this moment. The due date is the moment the loan confirms plus the offer's term. The interest, the late fee, the grace window and the collateral are the offer's, copied onto the loan. Nothing can alter any of them afterwards.
The lender is not involved. Drawing a loan does not notify the lender, wait for them, or need anything from them. The lender's money was already held by the protocol when the offer was posted. The two sides never interact directly, before or after.
The loan token is the borrower's key to getting the collateral back after repaying. It is a token like any other in the wallet, restored from the seed phrase if the wallet is reinstalled, and gone if it is sent away. Repaying itself does not need it. Positions and recovery.
If the dialog refuses
| Message | What to do |
|---|---|
| That is below the smallest borrow this market allows | Draw more, or take everything the offer has left, which is always allowed |
| You hold less than the collateral the smallest borrow needs | Shield more of the collateral token first |
| That offer changed under you | Another borrower drew from it first. Reload the board |
| Your computer's clock disagrees with the chain's | Borrowing records a start time and refuses one far from the network's. Fix the clock and try again |
Repaying
A loan is repaid in full, in one transaction, in the token that was borrowed. There is no partial repayment and no extension.
| When | Amount due |
|---|---|
| Before the due date | Principal + interest |
| After the due date, within the grace window | Principal + interest + late fee |
| After the grace window | Repayment is no longer possible |
The interest and the late fee were both fixed when the loan was drawn. The loan's page shows the exact figures for each case and a clock showing which window the loan is in. The protocol fee is not part of what a borrower pays: it comes out of the lender's interest, and the repayment amount is the same regardless of the fee rate.
- Open the loan from the Open loans tab of Positions, or from the To do list if the due date is near.
- Choose Repay. The dialog shows the amount due right now, split into what goes to the lender and the protocol fee taken from the interest, and the times the loan is due and the grace window ends.
- Approve in the wallet. When the transaction confirms, the loan's status becomes Repaid.
Repaying does not need the loan token. Anyone holding enough of the borrowed token can repay a loan, including someone other than the borrower. That is deliberate: a borrower who has moved funds to a different wallet, or who asks a friend to settle up, can still be repaid on time.
Nothing prevents repaying on day 2 of a 14 day loan, and the interest is the same either way. Each transaction takes tens of seconds to prove and confirm, wallets can be out of sync, and clocks can be wrong. A repayment attempted in the last minutes before the due date, or before the grace window closes, is a repayment that might land on the wrong side of it. Repaying comfortably early costs nothing and removes every one of those risks.
At the boundary. A repayment built for the on-time amount that confirms after the due date is refused, because the amount no longer matches. Retry; the interface recalculates with the late fee. A repayment that confirms after the grace window has closed is refused outright, and at that point the loan can only be seized.
Getting collateral back
Repaying and getting the collateral back are two separate steps. First repay, within the deadline, to settle the debt. Then claim the collateral, which can be done at any time afterwards with no deadline. Claiming needs the loan token.
- Open the repaid loan from the Open loans tab of Positions. The To do list also shows it.
- Choose Claim collateral.
- Approve in the wallet. The full collateral returns to the wallet when the transaction confirms.
There is no time limit on claiming. A repaid loan's collateral waits indefinitely, and the lender cannot touch it. The borrower's claim and the lender's collection of the repayment are separate transactions that can happen in either order; neither waits on the other. What comes back is exactly what was posted, in the same token. The protocol never sells, converts or takes a share of collateral on a repaid loan.
A loan that was not repaid by the end of its grace window cannot have its collateral claimed. Once the lender seizes, the collateral is theirs, and the loan token no longer unlocks anything. Default and seizure.