🔟Lending FAQs

Can I partially repay my loan? Debt can be partially repaid, but a borrower will only receive their collateral back when the debt is paid in full.

What happens if I overpay my debt? Over-payments are credited towards the next loan the borrower opens. As an example Loan A: Chad deposits $100 collateral, owns $50 in debt.

Chad pays off debt with $60. Collateral is now $0, Debt is now -$10

Loan B: Chad deposits $100 collateral, owns $50 in debt. Chad has +$10 credit from previous overpayment, so they receive $60, but still owe $50 in debt.

Is there a best time to open or close a loan?

Yes, it is best to open and close loans during times of low volatility. To protect the network from price manipulation, virtual pool depths for lending shrink during times of increased volatility (liquidity fees can greatly increase). Managing loans during times of low price volatility on THORChain will yield the most desirable results. Patient borrowers pay the least fees.

Will I always receive my full collateral back?

You will receive your full collateral back upon repayment minus slippage fees incurred from the loan opening and closing process. During low volatility, fees will be lower. During times of high volatility, fees will be higher as outlined above. Patient borrowers pay the least fees.

Who provides the assets for me to borrow?

RUNE is swapped to the borrowed asset via the liquidity pools, then sent to the borrower. Therefore, as long as THORChain pools are available, there are always assets available to be borrowed. The deeper the pool depth, the less slippage incurred.

Where is my collateral stored?

The collateral is swapped to RUNE via the pools. Thus, nobody “stores” the collateral in custody. As long as THORChain pools are healthy and functioning, any collateral which is deposited will be swapped to RUNE, followed by arbitrageurs rebalancing the pools as usual.

What happens if my collateral value drops?

As per above, the collateral has already been swapped to RUNE at the moment of loan opening. Therefore borrowers are not under any risk if collateral value drops. This is how THORFi Lending's zero liquidation design is achieved.

Who is the counterparty to my loan?

The THORChain protocol and all RUNE holders are the counterparty to each loan. The RUNE burn/mint mechanism means RUNE concentrates/dilutes (among all RUNE holders) as loans are opened and closed. Liquidity providers and Savers (Earn) are not directly lending their assets to borrowers. The pools are just the conduit to swap between collateral and debt.

Which assets can I pay down my debt with?

Debt can be repaid with any THORChain-supported asset. Assets used to repay loans will be sold for TOR to repay the debt, since debt is denominated in TOR.

Can I borrow more if my collateral increases in value?

No, When a loan is opened, the full debt (based on current Collateralization Ratio) will be issued. There is no option to request additional debt, unless the borrower repays the original debt, fully redeems the collateral, then reopens a fresh loan.

Can I open another loan if I have existing ones?

Yes, the wallets with existing loan positions can open a new loan by depositing fresh collateral - new debt will be issued based on the new collateral and current Collateralization Ratio.

When will lending be available for more collateral options?

The lending protocol is initially supporting BTC and ETH. The functionality to support lending on all Layer 1 gas assets on THORChain - BNB, LTC, BCH, ATOM, AVAX, and DOGE - is already available and simply needs to be turned on by the validators through mimir.

Is lending compatible with Streaming Swaps?

No. Debt issuance and loan repayment is subject to traditional time-optimized slippage. Use THORSwap interface for accurate estimates.