Extend Active Loans

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Loan extensions enable perpetual liquidity for borrowers with active loans on the Arcade.xyz platform.

Borrowers can extend loan terms with open offers on their NFTs / Vaults (collateral) in escrow with the Arcade Protocol without repaying the full amount on their active loan. To extend a loan, borrowers must pay the full interest on their active loan and any difference between the new and old principal amounts.

Key facts regarding loan extensions:

  • Borrowers can extend loans with any lender that makes an extension offer on the platform.
  • All active loans on the Arcade Loan Marketplace are open to extension offers by default.
  • Loan extensions must be in the same token as the existing loan - for example, if the existing loan is in USDC - the extension must also be in USDC.
  • Loan extension offer terms (Principal, Repayment, Interest Rate, Duration) are flexible - any or all terms can match or differ from the active loan.
  • Borrowers must pay down the interest amount on the active loan and any difference between the new and old principal amounts - this amount is represented by the Due Now amount column on the offers table.

Borrowers with active loans can proceed through the below steps to facilitate a loan extension:

  1. Borrowers can receive extension offers from any lender on NFTs / Vaults (collateral) in an active loan. After lenders make extension offers on an active loan, borrowers can choose an extension offer from a lender.
  1. To execute the extension, the borrower must pay the Due Now amount from their connected wallet.
    The Due Now amount represents the current interest amount on the current loan and any difference in principal amount between the existing and new loans. The borrower must then approve a withdrawal of the Due Now amount from their connected wallet.

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Protocol Function

Approve: enables the protocol to withdraw the token type from the connected wallet.

  1. The borrower must then confirm the loan extension in their connected wallet (Function: Rollover Loan) to repay the existing and start the extended loan with the new/updated terms.

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Protocol Function

Rollover Loan: enables the protocol to atomically pay off the existing loan and start a new loan.

  1. The loan extension is complete! New ERC-721 promissory notes (borrower and lender) are minted by the protocol and distributed to each party. The original lender is made whole and both ERC-721 promissory notes (borrower and lender) from the original loan are burned.

Updated 6 months ago