Lending and borrowing

In shortBorrowers post a request backed by an RA/TAZ pool at the interest rate they ask, lenders send quotes in TAZ at that rate, lower, or higher as a counter-offer, and the borrower keeps the pool's fees the whole time. A loan whose debt rises above 90% of the collateral's value can be liquidated; from saturnloans 1.0.2 only by its lender. From saturnloans 1.0.3 a liquidated or defaulted loan hands the whole pool to the lender.

Loan token

TAZ

Term

7 days to 1 year

Interest rate

asked by the borrower; lenders may quote lower or counter-offer higher (the Lending page signs at most 100% a year; no contract cap)

Origination fee

1%

Liquidation line

90%

Flag to liquidation

5 min to 1 h up to saturnloans 1.0.1; 6 h to 24 h by default from 1.0.2

Grace after due date

3 days

Open loans

5 per borrower

Not repaid

the whole pool goes to the lender, from saturnloans 1.0.3

Saturn Lending is a marketplace where people who need TAZ post a request and people who have TAZ send offers. The borrower keeps providing liquidity the whole time. The pool stays open, keeps trading and keeps earning; it cannot be removed while the loan is open.

Two generations of the lending contracts are live. Mainnet runs the older ones today, where a pool backing a loan is only locked in place. From saturnvault 1.1.0 and saturnloans 1.0.3 the pool is pledged: the vault holds its certificate while the loan runs, and if the loan is not repaid the whole pool goes to the lender. The Lending page reads which contracts a chain runs and follows them; this guide says which rule belongs to which version.

Who is who

Collateral must be an RA/TAZ pool; every other pair is refused. From the lending contracts' 1.1.0 upgrade on, a loan also needs a reference pool: an RA/TAZ pool with burned or time-locked liquidity that the Saturn admin sets. Until one is set, no loan can open. On mainnet none is set yet.

Borrowing, step by step

1. Open Lending, Post request. Choose the pool, the amount of TAZ you want, the term (7 days to 1 year), the interest rate you ask, a message, and how long the request stays open (1 to 30 days).
2. Posting registers your credit profile automatically, starting at 200 points. Lenders see it next to your request.
3. Quotes arrive in My positions, Requests. Each shows a rate, a term and an amount. A lender may quote the rate you asked, a lower one, or a higher one as a counter-offer: a counter-offer is marked as one, and the accept dialog shows how much more interest it costs over the term. Accept the one you like; the rest expire or are withdrawn.
4. On accept, the pool is locked as collateral and the TAZ lands in your wallet minus a 1 percent origination fee. From saturnvault 1.1.0 the pool is pledged and its SATURN certificate moves into the vault until you repay.
5. Repay from My positions, Loans. You can pay any amount at any time. Once the total owed is paid the loan closes, the pool unlocks, and your score goes up. From saturnvault 1.1.0 the certificate comes back to your wallet in the same transaction.

Lending, step by step

1. Open Lending, Marketplace. Each request shows the borrower's credit score, the amount, the term, the rate asked, the collateral pool and what it is worth.
2. Press Offer quote. Set your rate: the rate asked, a lower one, or a higher one as a counter-offer, up to 100 percent a year (the contracts only want a rate above 0; the cap is the page's). Then the term, the amount, and how long the quote stays open. The form shows the loan-to-value your quote would open at, with an amber note above the 90 percent line and a red one above 100 percent, where the debt is worth more than the pool; there it asks you to confirm before you sign. No contract caps the amount: sizing the loan against the collateral is your call.
3. Sign. The TAZ moves into escrow on the market contract so the borrower can accept without waiting for you.
4. Nothing opens until the borrower accepts, counter-offer or not. If the borrower does not, withdraw the quote and the TAZ comes back.
5. Up to saturnloans 1.0.2 each repayment is sent straight to your wallet. From 1.0.3 your share of every payment waits in an escrow in the loan contract; withdraw it from My positions, Loans, whenever you like. Nothing about your wallet can then make a borrower's payment fail.
6. If the borrower misses the due date by more than 3 days, or the loan-to-value rises above 90 percent, you can act; see below.

The money

• Interest is simple, not compounding: principal times rate times days, divided by 365. A 1,000 TAZ loan at 15 percent for 90 days owes 37 TAZ of interest.
• The origination fee is 1 percent of the principal, taken from what the borrower receives.
• The debt from day one is principal plus the full interest for the term. Every payment reduces it.
• A payment made after the due date counts as late and costs 30 credit points. Repaying early is fine and counts on time.

Who gets the pool's fees during the loan

The borrower. The pool keeps earning its provider fees and the borrower can claim them from Liquidity at any time, loan or no loan. Fees come out of a separate claimable balance, not out of the reserves, so claiming them does not weaken the collateral. The lender's return is the interest written into the loan. From saturnloans 1.0.3, fees still unclaimed when a loan is liquidated or defaults go to the lender with the pool.

What happens to the pool, from saturnvault 1.1.0 and saturnloans 1.0.3

• While the loan runs, the pool is pledged and the vault holds its SATURN certificate. Swaps, fee claims and adding liquidity carry on, and liquidity you add becomes collateral too. The pool cannot be removed, locked, burned, put in a reward campaign or listed on bonds, rentals or options, and its fee cannot be changed. Liquidity shows it with a pledged badge.
• Repaid in full: the pledge is released and the certificate comes back to the borrower in the same transaction.
• Liquidated or defaulted: in the lender's own transaction the lender becomes the pool's provider and receives its certificate. The whole pool goes: every reserve, the fees not yet claimed and any liquidity added during the loan, even when the pool is worth more than the debt. The lender can remove it from Liquidity or keep running it. The borrower keeps nothing.
• Nothing is left for the Saturn admin to settle by hand: the vault's manual settlement is gone.

A late default can cost far more than you owe. A default does not compare the pool with the debt: once 3 days have passed after the due date, the lender can take the whole pool, whatever it is worth. Until the lender does, you can still repay, late.

Collateral value and the 90 percent line

The collateral is the whole pool at its fair value: 2 × √(RA reserve × TAZ reserve × P), where P is the TAZ price of RA in the reference pool. At that price it is simply twice the pool's TAZ side. A pool trading away from the reference price is worth what it would hold at that price, which is less than adding up its reserves. Swaps into your pool do not change the value; only a move in P does (and fees, which only add to it). The loan-to-value ratio is the remaining debt divided by that value. The line on mainnet is 90 percent.

• Liquidation, from saturnloans 1.0.2. If the ratio goes above 90 percent, the lender can flag the loan. Between 6 and 24 hours later, the lender can liquidate it if the ratio at the reference pool's average price since the flag is above the line. The lending admin can change that window; the Lending page shows the one in force. Nobody but the lender can flag or liquidate a loan.
• Each new flag by the lender replaces the last one and restarts the wait. So a lender whose window was spoiled by a short price jump can start again, and a price from before the latest flag never counts in the average.
• The average protects the borrower only if someone trades the reference pool during the window. A swap into the reference and back inside one transaction adds nothing to it, but a price someone pushes and holds counts for as long as nobody trades it back. The default window gives the borrower and arbitrage traders hours to trade the price back (a shorter window set by the admin gives them less), and the borrower can repay at any time, flagged or not, until the loan is closed.
• Liquidation up to saturnloans 1.0.1. If the ratio goes above 90 percent, anyone can flag the loan, and if it is still above the line between 5 minutes and 1 hour later, anyone can trigger it. Flagging again while a flag is live changes nothing. Each reading is a spot price of the reference pool, taken inside the transaction that flags or triggers, so someone can swap into the reference, read, and swap back in one go, paying only the swap fees.
• Default. Once three days have passed after the due date, the loan can be declared in default: from saturnloans 1.0.2 only by the lender, before by anyone. Until then, and until someone does, the borrower can still repay, late.
• Either way the loan closes as a default and the borrower loses 150 credit points.

From saturnloans 1.0.3 with saturnvault 1.1.0, a liquidation or default hands the whole v4 pool to the lender in the same transaction, as described above.

Up to saturnloans 1.0.2 (mainnet today), the lender receives nothing on-chain. A v4 pool is not handed over: the contract only marks it liquidated, the pool stays locked with the borrower as its owner, and no contract of that generation can hand a pool to another wallet. Recovery on a v4-backed loan there depends on the Saturn admin settling it by hand.

Lending more than the pool is worth

The contract sets no maximum when the loan opens. A loan for the full value of the pool opens above the 90 percent line, and so does one a little under it, because the interest counts as debt at once; it can be flagged for liquidation straight away. That does not protect the lender. From saturnloans 1.0.3 liquidating gives the lender only the pool, so lending more than the pool is worth loses the difference if the borrower never repays; before 1.0.3 a v4 pool is not handed over at all, and the whole amount is lost on-chain. Lenders therefore quote well under the collateral's value. The Lending page warns a lender in amber above the 90 percent line and in red above 100 percent.

Limits

TAZ rewards for finished loans

When a loan is fully repaid, the protocol pays a TAZ bonus out of a treasury: 30 percent to the borrower, 30 percent to the lender and 40 percent shared by the lender's RA pledgers. From saturntaz 1.2.0 the bonus grows with the loan's size in TAZ, the days it actually ran up to the reward claim (never more than the term it was quoted for) and how much RA is pledged to the lender, up to a ceiling per loan, and it is never more than the fees that loan paid the protocol, so a loan between one person's own wallets cannot make money. It is paid only when the loan is large enough, ran the minimum number of days (counted up to the reward claim), the lender has enough running pledges and the borrower is not the lender. The admin sets these amounts, and until the reward ceilings are set no bonus is paid. Defaulted and liquidated loans pay nothing. The treasury has to hold TAZ for this to pay out; the Treasury tab shows its balance.

• Up to saturnloans 1.0.2 the bonus is paid inside the final payment.
• From saturnloans 1.0.3 it is claimed in a transaction of its own, so a lender's wallet refusing TAZ can never block a repayment. Anyone can send the claim, once, within one reward day of the final payment: 24 hours unless the admin sets another day length (devnet runs one-minute days). After that it is not paid.
• Saturn Ops asks the borrower to sign the claim right after the final payment, and shows a Claim button with a countdown on the repaid loan while the window is open.

Questions people ask

Can I borrow more than my pool is worth?

No contract stops a lender from quoting it. Such a loan opens above the 90 percent line and can be flagged for liquidation straight away, but from saturnloans 1.0.3 that gives the lender only the pool, so the lender loses what the pool does not cover; on the older contracts a v4 pool is not handed over at all. Lenders quote below the collateral's value, and the Lending page warns them in red before they sign.

Can a lender offer a higher rate than I asked?

Yes. The rate in your request is the rate you ask; no contract holds a quote to it. A lender may counter-offer a higher rate, up to 100 percent a year on the Lending page. You see it marked as a counter-offer, with the extra interest in TAZ, and nothing happens unless you accept it.

Does my credit score raise how much I can borrow?

Not in the marketplace. It sits beside your request so lenders can price the risk, and a good score gets better rates and more quotes.

Can I cancel a request?

Yes, while it is open and unaccepted, from My positions.

What happens to my pool if I do not repay?

From saturnloans 1.0.3, a liquidation or default gives the lender the whole pool: provider rights, certificate, reserves, unclaimed fees and anything you added during the loan, even if it is worth more than the debt. On the older contracts the pool stays locked until the Saturn admin settles it.

Can a lender quote a different pool from the one I offered?

Not once the market has the same-pool rule, which comes with saturnvault 1.1.0: a quote must name the pool in your request, and the quote form shows it as fixed. On the older market a lender's own script could, and the Lending page warns you before you accept.

Where do my repayments go as a lender?

From saturnloans 1.0.3 into an escrow in the loan contract. My positions, Loans shows what is waiting and a Withdraw button.

Can a lender take back a quote?

Yes, any time before the borrower accepts it. The escrowed TAZ returns.

What if RA moves in price?

The value follows the square root of P, RA's price in the reference pool: a 21 percent fall in RA lowers it by 11 percent. A fall pushes the ratio up; a rise pushes it down. Watch the ratio in My positions and repay part of the loan to bring it down if needed.

Can someone swap into my pool to push my loan under?

No. Swaps keep the product of the two reserves, and the value depends only on that product and the reference price. A swap moves your reserves, not your collateral value.

Do I need to register to lend?

No. Only borrowers get a credit profile, and that happens automatically when they post.