Protocol
Our lending product is facilitated by the MetaStreet.xyz lending protocol. MetaStreet is a decentralized finance (DeFi) protocol that provides a liquidity infrastructure for NFTs allowing owners of such NFTs to get instant liquidity without having to sell their assets. Structuring is enabled through MetaStreet’s Automatic Tranche Maker (ATM), a tranche-based lending system where liquidity pools are divided into different risk levels, giving liquidity providers the ability to pick their risk-reward profile.
The Vaulted Watch (Watch-backed NFT) is used as collateral for each loan. By association, the watch that the NFT represents ownership of is securing each respective loan. Generally a LTV ratio of 70% is used which is fairly conservative given that the watch price market is stable and non-volatile.
All transactions including lending, borrowing, and liquidation are automated with the use of smart contracts to ensure security and efficiency while interest rates are dynamically adjusted based on deposits and availability to balance supply and demand.
How it Works
Market Participants
Lenders choose the following terms when they deposit funds into a pool
Collateral = the NFT collection you want to lend to
Max Price or LTV = highest NFT price (or LTV) you are comfortable lending at
Max Term = longest duration you are comfortable lending to
Rate Tier = target interest rate you are comfortable lending at (defaults to market)
Deposit Amount = how much capital you are comfortable lending
Borrowers will see single offers according to these terms and can then borrow from that pool
How Pool capital is organized and aggregated
Capital is organized by Price, Term, and Rate Tier first THEN aggregated with all Deposits. This allows ALL lenders to act collaboratively and provides borrowers with the best possible terms.
All risk tolerances: Lenders with low risk tolerances can participate at lower returns in the same loan as high risk tolerance lenders who want higher returns. The low risk lenders get insurance (default protection) from the high risk lenders, while high risk lenders get leverage (boosted returns) from low risk lenders.
No capital requirement: all capital is aggregated so no matter how much you deposit, your capital will be combined with other depositors to originate loans.
Single offer for Borrowers: once the capital is organized and aggregated, single loan offers with the best possible terms are then made available to Borrowers. Borrowers simply choose the Term and Amount they want to borrow in a single click.
This is subject to change. Visit MetaStreet to find the latest: MetaStreet
Check out this video for an overview on the lending interface and managing positions!
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