Credit Facility FAQ

What happens if i don't repay the loan?

Since every token is backed by reserves at the floor price value, the protocol doesn't need to manage a liquidation engine, meaning the protocol doesn't seize borrowers' assets. In the event of a default (due to expiry), the protocol simply burns the collateral, reducing the circulating supply and reserves at a ratio that grows the intrinsic value.

Is there a capacity on how much the protocol can lend out?

The ultimate capacity of the protocol can lend out is 100% of the reserves, meaning the total value of Baseline token in circulation.

Why is the origination fee so high when other lending markets charge less?

The origination fee is a fixed, one-time fee unlike traditional lending markets that charge an annualized interest rate that changes with market demand. 5% can also be thought of as the privilege of accessing liquidity no matter market conditions.