Defrag is a DAO-driven Lending protocol on Arbitrum.
You can lend both fungible and non-fungible tokens as collateral.
Advantages of using loans at DeFrag
Instant liquidity for NFT collateral: DeFrag uses the Peer To Pool model of NFT lending. You deposit collateral, borrow USDC, and repay at any time.
Borrowing at near 0%: when your Loan-to-Value ratio is less than 20%.
No APR% spikes: your cost of borrowing (APR) is based on your LTV and is not affected by your current pool utilization rate. In other words, your APR won't go up just because others are borrowing more in the pool. This is the Black Scholes dynamic APR pricing model that calculates a user's cost of borrowing (APR) based on the riskiness of their loan. In other words, low LTV = low APR.
Earn USDC: supply to one of the underwriting pools to start earning fees from borrowers.
Ability to utilize collateralized NFT assets in-game: Smol Brain NFTs continue to earn IQs in school.
Collateral Price Oracles
Each collateral asset has its own price oracle that participates in loan calculations as users interact with the protocol. The way prices are calculated and updated varies from asset to asset.
NFT collateral Liquidations
If the loan-to-value ratio reaches 83%, the NFT collateral will be liquidated and the user will have ~24 hours to either pay off the loan or add more collateral to bring the LTV ratio below 83%. If the user doesn't do so, his account is liquidated and the underwriters become the owners of the liquidated NFT collateral.
