Request a borrow
The borrowing UI looks like this: The borrow request looks like this: When borrowing in openLend, you request financing on your own terms. Collateral token, borrow token, loan-to-value, liquidation threshold, and term are all configurable, among others. You can choose an interest rate curve. For example, for a given borrow request, the offered rate might start at 1% and increase slowly over time until reaching that request’s chosen maximum rate. The first lender to accept locks in the rate at that time and you receive your loan.
Interest model
In openLend, interest is calculated as simple APR. Partial payments are immediately sent to the lender and credited against the borrower’s debt. A commitment interest parameter selected by the borrower can help manage prepayment risk. When refinancing or fully repaying, the borrower must pay at least the committed amount of interest. Borrowers seeking lower rates may choose higher commitment interest to make their loan more attractive to lenders.Refinance
Open a fresh interest rate curve, a new lender pays the previous lender what’s owed, and a new loan starts. You can request extra borrow or pull collateral out when refinancing.Default terms
If a loan is not fully paid back or refinanced before the term is up, you lose all of your collateral to the lender.Managing your position
You can top up collateral, repay debt, or refinance at any time during the term so long as a liquidation is not underway. During liquidation you are locked out until the process completes.Liquidation
Liquidation is permissionless, meaning anyone can try to liquidate you at any time. The liquidation process is as follows: an openOracle game is spawned to determine the market rate of your collateral token versus the borrow token. If the final openOracle price implies your collateral value is under the liquidation threshold, you lose all of your collateral. Liquidators must put up a stake whose amount you as the borrower decide when requesting financing. If the liquidation fails (final oracle price implies collateral value is sufficient), you earn the stake and may resume repaying debt, topping up collateral, or refinancing. Liquidation succeeds if your collateral value, after applying the liquidation threshold, is less than your debt. Debt is calculated as principal plus the greater of accrued interest and commitment interest.Grace period
If a liquidation attempt fails too close to maturity or after maturity, openLend adds a grace period to the loan’s term, giving you extra time to fully pay back debt or refinance. When in grace, further liquidations are not possible.Oracle game fees
Each round of the oracle game, proportional fees are levied on takers. Part of these fees are routed to you as the borrower. Since each round of the oracle game is exponentially larger than the last, borrowers can be compensated significantly for persistent delay. The borrower chooses the per-round oracle game fees, but should note that higher oracle game fees lead to reduced oracle price accuracy, since the orders are more expensive to take in percentage terms.Parameterization freedom
While loan parameters (collateral token, borrow token, LT, LTV, oracle game, interest rate curve, stake etc) are largely controlled by the borrower, they still need to be attractive enough or a lender won’t fill at a reasonably low interest rate.Health ratio
It is a good idea to maintain a healthy buffer between your borrow value and your liquidation threshold. The wider your buffer, the bigger the openOracle mispricing needed to liquidate you, and the higher the profit available to anyone who corrects the mispricing. In a competitive market, oracle mispricings should not survive very long. That said, it can be quite profitable to defend your own position if it’s just you against an attacker.Recommended openLend borrower practices
- Maintain a healthy collateral buffer (health ratio) relative to your debt.
- Refinance or close out debt when out of the prepayment penalty window (defined by commitment interest).
- Don’t wait until the last minute (close to maturity) to repay or refinance debt.
- Balance the oracle game’s initial liquidity. It should be large enough in absolute terms that correcting a mispricing stays profitable even during gas spikes, but small enough relative to your equity buffer that running a liquidation stays affordable and lenders don’t demand an extreme rate.