Borrowing & Repaying

This page details the prerequisites for borrowing, how to a request a loan, what a successful loan request looks like and how to repay a loan.

Borrowing

See this page (link) for a detailed breakdown on how to borrow (taking a new loan). Note there are a number of requirements a user must meet prior to being issued with a loan. Similarly, there are number of restrictions on new borrowing. These are set out in more detail below.

Repaying

A user can repay their loan from any address linked to their NFCS. See this page (link) for a detailed breakdown on how to repay a loan.

Prerequisites to borrowing

To ensure a user can successfully request a loan they need to satisfy several conditions. Specifically a prospective borrower must:

• Have minted a Non-fungible credit score (NFCS)

  Read here about what is a NFCS and how to mint NFCS token for borrowing.

• Have an eligible credit score.

  Eligible credit scores range from 1 to 10 and are unique to a NFCS. A credit score is provided on the initial minting of a NFCS and is required to be updated at least 10 minutes prior to taking out a new loan. A user requesting a loan through the dapp will see their score being updated in real time when they confirm their loan request (“Credit Score update”). Behind the scenes this queries RociFi’s Underwriter API (see this example of current credit score for NFCS ID 1).

  Note that credit Scores 1 to 6 allow borrowers to take under-collateralised loans.

• Request the loan from their primary wallet.

  A single NFCS may be linked to several addresses. However, to borrow the loan request must be from the primary address. This is the address that minted and holds the NFCS. Requests from other address will be rejected.

• Have sufficient collateral on the protocol or in their primary wallet.

  Only one type of collateral can be used to support a loan. For instance a user wanting to take a 100 USDC loan with a LTV of 125% would need to post $80 of collateral. They would need to provide this in one collateral type such as WETH. It is not possible to provide half in WETH and half in MATIC.

  Note that users can place collateral on the platform prior to taking a loan. This is marked as available collateral as it can be easily removed if it is not supporting a loan. When borrowing the protocol will take from this amount first. If this is insufficient then any additional collateral required to be supplied by the borrower. If there is insufficient collateral the loan request will fail.

• Select a correct set of loan terms

  There are numerous loan terms in each pool. One loan term is unique combination of NFCS credit score, loan duration, LTV and APR. A prospective borrower must request a loan term that is actively being offered to their score. If a user is engaging with the protocol through the RociFi dapp then they will always be presented with active loan offers.

• Select a loan amount within their available credit line

  Borrower’s available credit line is the max stablecoin amount that the borrower is eligible to borrow minus their total outstanding borrowed.

Limits on borrowing

These are several limits that can restrict the number or size of loans issued by a lending pool that have been put up in order to manage credit risk:

• Minimum loan size

  This parameter is set for each pool and is the minimum size a loan must hit for it to be successfully granted. This is currently set to $1 so, it would not be possible to take a $0.50 loan from that pool.

• Maximum amount available for borrowing from a single pool

  This parameter is set for each pool and is the maximum value that is allowed to be lent out across all loans in a given pool. For example assume this parameter was set to $1m in the USDC pool. In the same pool there are numerous loans that still need to be repaid. In total $999,000 has been distributed to borrowers and still needs to be repaid. If a new borrower wanted to take a loan $1,500 they would be unable to do so ($999,000 + $1,500 > $1m).

• Maximum amount borrowed per NFCS

  This sets the maximum amount that a user is allowed to borrow. It is specific to each pool and will vary by NFSC score. Total amount borrowed by a user is calculated by summing the outstanding principal due on all of a user’s loans. The outstanding principal due decreases with repayments once the payments have paid off any accrued interest on the loan.

• Maximum number of loans

  The maximum number of open loans a single borrower may have in one pool at any one time is 2.

• Maximum loan size

  Every loan term has a unique max loan size. You can see these all listed here. When a user selects a loan term they will not be able to borrow an amount above the max loan size. They could take a second loan out as long as they haven’t exceeded their maximum number of loans or any other limit.

• Available liquidity in a pool

  Another potential limit to the amount a user can borrow is the available liquidity in a pool. If there is an insufficient amount of liquidity in the pool then a loan request will be rejected.