Vendor Finance
  • Overview
    • What is Vendor Finance?
    • Vendor Finance V2
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        • ✅Fixed Rates
        • ✅No Liquidations
        • ✅Fixed Terms
      • Definitions
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        • Lender First Pool
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          • Navigating the Borrow Page
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    • Vendor Finance V1
      • Use cases
      • Benefits
        • ✅No Liquidations
        • ✅Fixed Rates
        • ✅Fixed Terms
      • Definitions
      • Lend
        • ➕Adding Funds
        • ➖Withdraw Funds
        • 🤝Private Pools
        • ⚠️Token w/ No Oracle
        • 🔄Lender and Rollovers
      • Borrow
      • Repay Loan
      • Rollovers
        • 🔄Lender and Rollovers
        • 🔄Steps to rollover
        • 🔄Associated Fees
        • 🔄Lend Ratio Shifts
      • Defaults
      • Collect Payments
      • My Pools Page
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  • Borrower
  • What about the lender?
  1. Overview
  2. Vendor Finance V1

Defaults

Defaults are not liquidations, they are a choice made by the borrower

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Last updated 2 years ago

Borrower

Defaults are not liquidations. Defaulting is a choice made by the borrower

are when a user forfeits their collateral to the lender. There are two reasons to why a borrower would do this:

  1. The borrower forgets to repay their loan by the , they will end up defaulting all of their collateral. They keep the whole loan.

  2. The borrower chooses to default. The borrowers collateral value may be below the value of the loan by the repayment due date (you can do this to hedge). It makes logical sense to not pay back the loan.

Please note, a borrower can repay pay a loan partially, they would then receive a partial amount of their collateral.

What about the lender?

The lender will receive all defaulted collateral minus vendor fees of 3%.

A protocol could lend out stablecoins for ETH if they want more exposure to ETH. By using Vendor Protocol they are setting a limit order to buy ETH from the borrowers at a predetermined price set by the

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Defaults
repayment due date
lend ratio