What is Borrowing
Last updated
Last updated
On the SOLARR Credit platform, you can use your NFTs as collateral to borrow ETH or USDT from lenders. This is known as an NFT Loan. However, certain requirements must be met for an NFT to be used as collateral.
Firstly, the NFT collection must be on the whitelist, which is a list of approved collections established to mitigate risks associated with highly volatile collections. The NFT must also not be marked as stolen or removed on SOLARR Credit or other markets like OpenSea, and valid loan offers must have been received from lenders.
When you accept a loan offer, an NFT Loan is established. You will receive the loan amount ETH/USDT in your wallet which requires you to repay the borrowed amount plus interest before the due date. During the loan period, the NFT is locked as collateral in the smart contract, and if you fail to repay the loan, the lender may obtain the NFT collateral.
The loan offer is a method through which lenders express their interest in lending crypto (ETH or USDT) based on the value of your NFT. A loan offer includes several terms, such as the Loan Amount, which is the amount of ETH/USDT the lender is willing to lend; and the Loan Repayment, which is the amount the borrower has to repay, including the amount borrowed and yield; and the Loan Period, which specifies the loaning period the borrower has to repay the loan; The Annualized Yield is also included in the loan offer, which is the annualized interest of the loan to the borrower, expressed as a percentage. It helps to measure how much interest will accrue on the loan value. Lastly, loan offers last 7 days, and once the offer expires, the offer becomes invalid.
