ACoconut - Loan Contract

A financial instrument that provides liquidity for investors or allows foundations to earn interests on excess capital.

Use Case Description

The system will allow Sellers to create new loan issuance, and allow Buyers to engage the outstanding loan .

Actors

  • Seller, who is the lender of the loan. Usually the Foundation who wants to provide liquidity to token investors;

  • Buyer, who is the borrower of the loan. Usually the token holders who want liquidity;

  • Timer Oracle, who is an external timer service provider that provides timing information to the loan contract;

Preconditions

  • Financial Service Providers have created loan instruments using the NUTS Technology Platform;

Process Flow

The diagram below depicts the process flow of the loan contract. The link to edit the diagram is here.

Main Process Flow

  • Seller creates new loan issuance using the selected loan instrument;

  • Seller deposits the borrowed token to the loan issuance;

  • Buyer searches loan issuance in the marketplace and engages to the target issuance;

  • Buyer deposits the collateral token. The borrowed token is available for withdrawal by the buyer;

  • Buyer pays back the borrowed token plus interest token; the collateral token is available for withdrawal by the buyer.

Alternative Process Flow

  • If the seller fails to deposit the borrowed token in time, the loan issuance becomes unfunded;

  • If the loan contract expires with no engagement, the loan issuance becomes complete with no engagement and will not be available for further engagement;

  • If the buyer fails to pay back the borrowed token plus interest, the loan issuance becomes delinquent.

Loan States

Below are the states of a loan contract.

  • Initiated: The loan issuance is created;

  • Engageable: The seller has deposited the borrowed token so that the loan issuance can be engaged by buyer;

  • Active: Buyer engages the loan issuance;

  • Complete Engaged: Buyer pays back in time;

  • Unfunded: The sellers fails to deposit the borrowed token in time;

  • Complete not Engaged: The issuance expires with no engagement;

  • Delinquent

    • The buyer fails to deposit the collateral;

    • The buyer fails to pay back the borrowed token in full in time.