The ABC Of lending
Learn and understand the most used terminology between lenders adnd borrowers.
| Term | Description |
|---|---|
| Lender | The party that loans out liquid SOL |
| Borrower | The party that receives the SOL while providing an NFT as collateral |
| Default | When the borrower doesn’t pay back the loan + interest, the loan defaults. The lender is able to collect the collateralised NFT. |
| Default rate | The percentage of defaulted loans on a given NFT collection. |
| Interest | When a borrower repays a loan they pay the lender extra SOL based on the agreed APY of the contract. |
| Loan offer | A lender offers a loan with set parameters that will be available to be taken by a borrower. |
| Floor price (FP) | The lowest ask price for an NFT from a certain NFT collection. |
| Annual Percentage Yield (APY) | Annual percentage yield is the percentage of interest earned on your principal, annualized over a year. |
| Loan to floor (LTF) | The |
| Total value locked (TVL) | The |
| Underwater (UW) | When an active loan exceeds the SOL value of the current floor. |
| Protocol | The protocol is the underlying contract or contract provider that makes the loan possible. Examples are Sharky.Fi, Citrus, Frakt. |