Pine is a decentralized asset-backed lending protocol that allows borrowers to borrow fungible digital tokens from lenders using non- fungible tokens as collateral.
NFT lending protocol
Segregated Liquidity Pool
Each lender creates its own segregated lending pool using the Pine protocol instead of participating in commingled lending pools with multiple depositors. This gives each lender the flexibility to choose the types of collateral they would like to lend against and set their own terms. Upon default on a loan position, ownership of the collateral is transferred to the lender. There is no need for a forced sale of the collateral because each loan and the underlying collateral are tied to only one lender. Finally, lenders face less compliance risk in a segregated pool structure compared to a public credit pool where funds from multiple depositors are commingled.
Term Loan
All loans are structured as term loans under the Pine protocol. This means that all loans in Pine have a fixed term, such as 7 days. Lenders can offer multiple loan terms when creating a pool of loans for a particular NFT collection. In addition, lenders can set different terms, i.e. LTV and interest rates, for different loan terms to manage the associated risk. The term loan structure makes it much easier for borrowers to manage their loan positions as all details such as maturity date, total interest payable, etc. are known and agreed upon on the onset when the loan is initiated. Under normal circumstances, borrowers are not at risk of liquidation if they repay or extend the loan before the end of the loan term.
Pine Now Pay Later (PNPL)
NFT buyers can obtain a mortgage loan for the purchase of NFTs on the public trading floors in a single atomic transaction. The transaction will be paid with funds from the buyer's wallet and a loan from the protocol in a ratio that the buyer deems appropriate and able to meet the LTV requirements of the loan. The newly acquired NFT will be owned by the protocol as collateral for the credit that the buyer initiated during the transaction, just like a regular NFT credit.
The LTV (loan-to-value) ratio is a measure that lenders use to compare the amount of the loan to the value of the asset being purchased with the loan. For example, if a lender provides half the value of an asset and the buyer covers the remaining amount in cash, the LTV ratio is 50%.
The end result is exactly the same for Pine Loan and PNPL. The only difference is the sequence of events.
This service can effectively facilitate margin trading of NFTs by spending only a fraction of the initial funds to purchase NFTs, providing traders with leverage in a simple atomic transaction. By utilizing term credit instead of a continuous credit structure, traders experience less pressure from price volatility and have a longer window of time before a margin call is triggered.
Bid Now Pay Later
With this feature, users can place bids on a specific NFT without having an equivalent amount of ETH in their wallets. The bid can be placed through the Pine smart contract with a margin of a fraction of the total amount. Each time a user places an active bid through Pine, a loan is issued against the ETH margin to fund the bid using leverage. Once the transaction is finalized, the loan will become a regular Pine loan and NFT will act as collateral.
Bulk Borrowing
This is a feature that simplifies BNPL and BidNPL processes and makes it possible to offer and buy NFTs with a 0 ETH balance on the buyer's wallet. It is a one-click solution that scans the borrower's wallet for all NFT collateral and borrows the highest amount of money with the best offers on the respective collections in a single transaction.
Pine Listing
Collateralized NFTs may still be available for listing. A borrower can submit an active bid for their NFT collateral with a desired price on the listing platform.
Together with the NFT purchase financing feature, this feature will allow for margin trading of NFTs, providing leverage for short-term traders.
NFT Price Oracle
Pine Pricer is the default NFT pricing oracle for loans initiated using the Pine protocol. But because Pine aims to create a decentralized infrastructure for NFT-backed loans, and to promote the trustless nature of DeFi, lenders are not required to use the pricing feeds provided by Pine Pricer. The use of Pine can be completely trustless.
Pine Pricer provides all stages of the loan cycle from loan origination, loan recall and the loan rollover process, providing reproducible pricing information for individual NFTs for use in the LTV calculation.
Lenders can use the SDK to set their own pricing, with the lender signing the oracle rather than Pine, which completely eliminates the possibility of Pine becoming a supply chain attack vector. In addition to creating their own valuation oracle, lenders can also choose to integrate NFT valuation oracles from third-party vendors.
