How it works
A loan on AMP Finance has two people in it, a lender and a borrower, and they never meet. What connects them is an offer on a public board and two tokens that prove who may act on which side.
- A lender posts an offer with fixed terms and receives an offer token
- A borrower draws from it, posts collateral, and receives the loan and a loan token
- Everything about a loan is fixed the moment it is drawn
- Repay in full by the due date, or within the grace window with a late fee
- After the grace window the lender may take the whole collateral
- No pool, no price feed, no liquidation, no partial repayment
The two roles
| Role | What they do | What proves it is them |
|---|---|---|
| Lender | Posts an offer, collects repayments, takes the collateral if a loan defaults | An offer token in their wallet |
| Borrower | Takes a loan, repays it, gets the collateral back | A loan token in their wallet |
There is no account and no login. The token in the wallet is the whole proof. Positions and recovery explains what that means in practice.
The life of a loan
- A lender posts an offer. The offer says how much is on offer, which token is wanted as collateral and how much of it, the interest for the whole term, and the term itself. The amount on offer leaves the lender's wallet and is held by the protocol. The lender receives an offer token.
- A borrower draws from it. A borrower can take all of an offer or part of it. They post the matching collateral and receive the loan in the same transaction, together with a loan token. The lender is not involved and is not notified; the offer simply fills.
- The clock runs. The loan's due date is fixed the moment it is drawn. Nothing about the loan changes after that: not the interest, not the collateral required, not the late fee.
- The borrower repays, or does not. Repaying before the due date costs principal plus interest. Repaying after it but within the grace window adds a late fee that was fixed on the day the loan was taken; during the grace window the lender cannot touch the collateral. Once the grace window closes, repayment is no longer possible, the lender may take the whole collateral, and the loan closes permanently.
- Both sides collect. After a repayment, the borrower claims their collateral back and the lender claims the repayment. The two claims are separate and can happen in either order, with no deadline on either.
What the protocol never does
- It never checks prices. The collateral required is an amount of tokens, decided by the lender, and it is never adjusted afterwards.
- It never sells collateral early. A loan can only end in repayment or, after the full term and grace window, seizure.
- It never changes the terms of a live loan. Everything is fixed when the loan is drawn, including any fee the protocol takes.
Compared with pooled lending
Readers who know pooled lending protocols will find AMP Finance familiar in its vocabulary and unfamiliar in its mechanics.
| Pooled lending | AMP Finance | |
|---|---|---|
| Where deposits go | One shared pool per asset | Each offer is held separately, on its own terms |
| Interest rate | Set by a formula, moves with demand | Fixed by the lender when the offer is posted |
| Duration | Open-ended | A fixed term chosen from a short list |
| Price feed | Yes, an oracle | None |
| Liquidation | Automatic, whenever collateral value falls too far | Never. Collateral is returned whole or seized whole after the term and grace window |
| Partial repayment | Yes | No. A loan is repaid in full |
| Counterparty | The pool | One lender, one borrower, neither knows who the other is |
| Privacy | Every position is tied to a public address | No address is attached to any offer or loan |
For a lender, terms are theirs to set and income is fixed rather than floating. But collateral is not a safety net in the usual sense: with no price feed and no liquidation, the protocol cannot react if the collateral loses value during the term. If a borrower decides not to repay, the lender receives the collateral, whatever it is worth by then. Lending returns and risks covers this in full.
For a borrower, there is no liquidation risk during the term. However far the collateral's price moves, nothing happens to the loan until the due date. There is no health factor and nothing to top up. In its place is a hard deadline: a loan must be repaid in full by the end of its term, or within the grace window with a late fee. After that the collateral is gone. Default and seizure explains the timeline.
For both, everything is fixed at the start and nothing moves afterwards. Once a loan is drawn, the interest, the late fee, the due date, the grace window and the collateral are locked, and nothing can change them. The trade-off is that neither side can adjust a live loan either: there is no topping up collateral, no extending the term and no repaying in parts.
A note on timing
Every action on AMP Finance is a transaction on the Midnight network, and each one takes tens of seconds to prove and confirm. Fees and transactions explains the stages. Because a loan's deadlines are real, repaying well before the due date rather than in the last minutes is the sensible default.