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Liquidity providers must individually select the borrowers they are willing to lend to, as liquidity pools are not shared among borrowers.
At any point in time, lenders can freely deposit into the lending pool of their choice at their chosen lending rate, as long as it remains within the pool’s order book tick range. In exchange, lenders will receive an NFT with original artwork that represents their position: the pool’s identifier, amount deposited, and chosen lending rate. Atlendis’ position NFTs are non-transferable.
Once funds are borrowed by the borrower, the liquidity providers get their chosen lending rate on the used capital.
The funds in lenders’ positions can become borrowed on three occasions:
• The borrower initiates a new borrowing cycle.
• The borrower further borrows from their pool.
• A lender with borrowed funds wants to exit the pool (see "Exiting" below).
It’s important to note that pools are not limited in size, therefore, even if the amount in the pool is higher than the maximum borrowable amount, any lender can add liquidity to the lending pool and challenge the lending rates. This creates market dynamics and gives access to a fair market rate discovery for both borrowers and existing lenders.
As long as their position is not borrowed, lenders can freely change their lending rate. Their position will be updated accordingly.
As long as their position is not borrowed, lenders can either totally or partially withdraw funds from their positions. For partially borrowed positions, lenders can withdraw the totality of the unborrowed funds.
In the near future, liquidity providers that hold eligible positions will be able to stake their positions into the pool’s staking program to further boost their earnings. Stay tuned!
A lender with a borrowed position who doesn’t want to exit their position in the current market conditions and would rather wait for the loan to mature, can choose to signal their position as exiting. Their position will remain unchanged until maturity. However, if a new borrowing cycle is initiated before the withdrawal of deposited funds, their funds won’t be used, preventing them from being involved in a new loan. This ensures predictability in the withdrawn amount. The lenders can withdraw their initial deposit plus the interest earned on Atlendis that corresponds to their chosen rate, and the interest earned on the third-party yield provider. The lenders are not subject to the current market conditions. Opting out is only permitted on borrowed positions and is irreversible.
When exiting a position with loaned-out capital, the exiting lender enables lenders with non-borrowed positions to replace them as lenders. There is no position transfer, the exiting lender’s position is burnt and the replacing lender’s positions are updated accordingly. The amount received by the exiting lender depends on the market conditions, hence the order book.
For detailed explanations of the calculations of the effective APY received after exiting a position, please refer to the Atlendis V2 whitepaper.
In the case where there is not enough liquidity to exit the position, the lender can decide to either partially exit their position, or wait for better market conditions. Note that opted-out positions cannot be exited. The position holder shall wait for the end of the loan term and is free to withdraw after repayment.