The Pawn Protocol is an open source and non-custodial liquidity protocol for loans backed by non-fungible tokens, or NFTs. Arcade enables decentralized, peer-to-peer lending and borrowing on the Ethereum blockchain.
The Pawn Protocol combines decentralized finance and NFTs. As DeFiDeFi - Decentralized Finance early adopters we noticed that crypto lending markets existed for fungible digital assets, but were largely undeveloped in non-fungible crypto markets. Our thesis is that NFTs will serve as the crypto native primitive for all kinds of digital property assets in the future and that a functioning credit market will be needed to serve the asset class.
NFT collectors can request loans against one or more of their NFT assets to be fulfilled by lenders via the Arcade app. First, connect with Metamask, select assets as collateral, then request a loan with specified terms.
Select NFT assets are available for use as loan collateral. We will add additional Ethereum based collections and projects systematically over time. All ERC20 tokens are supported out of the box.
All ERC20 tokens are supported included wETH, USDC, DAI.
A wrapped NFT, or wNFT, contains the borrower's loan collateral and is used when requesting a loan. When a user selects a single or group of NFTs as collateral they will be wrapped in new NFT (wNFT).
The wNFT for the loan is time-locked in an escrow smart contract. Funding principal is sent to the borrower and loan notes are issued giving claim rights to both sides of the loan.
There are no liquidations or margining capabilities in the protocol currently.
Borrower pays flat 2% of principal on every loan originated at the time of origination.
The Pawn Protocol is an experimental platform provided "AS IS" without warranties of any kind. Use of the platform, Arcade app, or smart contracts is at your own risk.
Updated 2 days ago