What is critical haircut?
Critical haircut defines the minimum market value the collateral asset may reach before the closeout procedure will be executed and lending transaction will be terminated.
What happens if the market value of my collateral asset changes?
If you are a borrower, you should monitor your transactions closely to make sure that the current haircut on your collateral never falls below the critical haircut value.
We have a system of checks and balances in place to help you avoid trade termination called maintenance haircut (analogous to maintenance margin in classical margin financing).
Whenever the value of your collateral falls below maintenance haircut value the system will notify you and will ask to provide additional collateral to raise the current haircut value above the initial haircut value.
What happens if I fail to repay my loan?
In this case smart contract will trigger a default event. Your collateral will be transferred to the counterparty to cover the loan amount and you will receive any excess collateral after application of the specific discount rate, the deduction of loan amount and any applicable fees.
How do I meet a margin call?
- Navigate to the relevant transaction where you are participating as a borrower:
2. Click "settle additional collateral" button.
- Make sure to settle enough assets to raise your current haircut above the maintenance margin levels, which are currently 23.5% for ETH and 32% for other ERC20 assets.
- Click Settle button and proceed with asset settlement to blockchain
How do I repay my loan?
It's simple, just log on to the Nitrogen platform, select corresponding transaction, and make repayment of your loan using your MetaMask wallet.
What is the loan repayment schedule?
There is currently no option for periodic repayments. Borrower returns loan and interest as a lump sum at the maturity of the lending agreement.
What if I miss repayment or am late making a repayment?
We notify our users when their transactions approach maturity, this includes both in-platform and email notifications. This notification system greatly reduces the chances for borrower to miss trade maturity date.
In addition to this functionality we employ a smart contract based auto-default functionality. This means that our backend will trigger a default event for your transaction on the smart contract if auto-default flag was used when you agreed to the transaction terms.
In case of auto-default your collateral will be transferred to the lender to cover the loan amount and you will receive any excess collateral after the deduction of loan amount and any applicable fees.
How do I withdrawal my collateral?
Your collateral will be returned to you automatically upon repayment. In a normal course of action you will receive an amount you posted less any applicable fees. In case when you as a borrower fail to repay the loan in time your collateral will be transferred to the lender to cover the loan amount, and you will receive any excess collateral after the deduction of loan amount and any applicable fees. The same procedure applies to margin call event e.g. the time when the value of your collateral falls below the critical level and becomes insufficient to cover the outstanding loan.