For Lenders

How to Fund Loans

Getting Started as a Lender

As a lender, you can earn interest by funding loans on Liquify LoanManager. Here's how to get started:What you need:

• A Web3 wallet (like MetaMask)

• USDC tokens on your chosen network

• Basic understanding of DeFi lending

How to Fund a Loan

1. Browse Available Loans

• Look for loans in "Fundraising" state

• Check the loan details: collateral, amount needed, interest rate, deadlines

• Evaluate the borrower's collateral ratio

1. Choose Your Investment

• Decide how much USDC you want to contribute

• You can fund any amount - from small to large

• Multiple lenders can fund the same loan

1. Fund the Loan

• Click "Fund Loan" on your chosen loan

• Enter the USDC amount you want to contribute

• Approve the transaction in your wallet

• Receive LoanShare tokens representing your investment

Understanding Your Investment

LoanShare Tokens:

• Each loan gets its own LoanShare token

• These tokens represent your stake in the loan

• You'll need these tokens to claim your returns later

Collateral Protection:

• If a borrower defaults, you get their collateral instead of USDC

• This protects you from losing your investment

• The collateral is distributed proportionally among all lenders

Tips for Choosing Good Loans

Check These Factors:

• Collateral Ratio - Higher collateral = safer loan

• Interest Rate - Higher rates = better returns but higher risk

• Loan Duration - Shorter loans = faster returns

• Borrower History - Check if they've successfully repaid loans before

• Collateral Type - Stable tokens are safer than volatile ones

Risk Management:

• Don't put all your money in one loan

• Diversify across multiple loans

• Start with smaller amounts to learn

• Consider the collateral's price volatility

Getting Your Money Back

After a Successful Loan

When a borrower successfully repays their loan:

1. Claim Your Repayment

• Go to the loan details page

• Click "Claim Repayment"

• Burn your LoanShare tokens

• Receive your USDC principal plus interest

1. Your Returns

• You get back your original USDC investment

• Plus the interest earned on the loan

• Minus protocol fees

If a Borrower Defaults

When a borrower fails to repay:

1. Loan Gets Liquidated

• Anyone can trigger liquidation after the deadline

• The loan state changes to "Defaulted"

1. Claim Your Collateral

• Click "Claim Collateral" on the defaulted loan

• Burn your LoanShare tokens

• Receive the borrower's collateral tokens instead of USDC

1. Understanding the Value

• You get collateral worth your original investment

• The value depends on current market prices

• You can hold or sell the collateral tokens

If a Loan Gets Cancelled

When a borrower cancels their loan:

1. Get Your USDC Back

• Click "Withdraw Funding" on the cancelled loan

• Burn your LoanShare tokens

• Receive your original USDC investment

1. Rejection Fee Bonus

• If the loan was partially funded, you might get extra collateral

• This is the rejection fee from the borrower's collateral

Common Scenarios

Scenario 1: Successful Loan

• You fund 1000 USDC at 10% interest

• Borrower repays on time

• You claim 1100 USDC (1000 + 100 interest)

Scenario 2: Defaulted Loan

• You fund 1000 USDC

• Borrower defaults, loan gets liquidated

• You claim collateral worth 1000 USDC (current market value)

Scenario 3: Cancelled Loan

• You fund 1000 USDC

• Borrower cancels the loan

• You get 1000 USDC back plus any rejection fees

Important Notes

Timing:

• You can only claim after the loan reaches its final state

• Repaid loans: Claim your USDC + interest

• Defaulted loans: Claim the collateral

• Cancelled loans: Claim your USDC back

Fees:

• Protocol fees are taken from interest earned

• Gas fees apply to all transactions

• No fees on your principal investment

Security:

• Your funds are protected by smart contracts

• No one can access your investment except you

• Collateral is locked until loan completion