Fluid Tokens

A peer-to-peer lending protocol where borrowers set the terms and front their Cardano NFT as collateral for an ADA loan. Lender then choose which loan to fund.

A decentralized marketplace where the NFT owners can unlock the value locked in their NFTs by offering them up as collateral for loans, in ADA, where they set the term of the loan. Lenders then review loan offerings on a lending marketplace and fund which loans they personally find acceptable.

How Fluid Tokens Works

Owners of an NFT can list their NFT, which must be from an approved collection, as collateral for a loan on the Fluid Tokens platform. This NFT owner, i.e. borrower, can set the amount of ADA they are requesting to loan against their collateral, along with the time limit for the loan, and the interest rate they are willing to pay on that loan. The borrower's NFT is then locked in a smart contract, along with these terms, and added to the marketplace for lenders to view.

Lenders browse through a marketplace of NFT collateral offerings and the associated loans, and can select a loan to fund. This marketplace will also include metrics related to previously approved loans for NFTs in each NFT collection, along with collection related data taken from various Cardano NFT marketplaces. The aim of this is to provide more information to lenders amount the collateral and loan offerings they are presented with. Once a lender finds a loan they are happy to funding they simply sign the smart contract and their ADA is sent to the borrower and the timer for the loan is started.

A "Featured Loans" section of the marketplace provides borrowers creating loans, who have burnt a required amount of FluidTokens, with greater exposures to lenders.

Loans must be repaid in a single transaction and borrowers can repay their loans early to reclaim their collateral early. Once a repayment deadline has been reached the collateral is not automatically sent to the lender. The lender needs to manually claim the NFT collateral once the timer on the loan has expired. This function allows the lender to leave the NFT in the smart contract and for the borrower to repay their loan later (for no added interest or late fees) than the expiration date of the loan. If the lender does claim the NFT then the contract is cancelled and they now own the NFT.

Fees

Lenders only pay the transaction fee for initiating the loan. Borrowers pay a platform fee proportional to the amount of borrowed ADA (owning FluidTokens can reduce the size of the fee the borrower pays with different tiers of fee discounts available depending on how many FluidTokens the borrower owns).

DAO

A DAO of FluidToken holders will be able to vote on various aspects of the protocol, including:

Proposals to change and upgrade the protocol (They will also be able to create these proposals)
To verify NFT collections for use as collateral on the protocol

Industry

DeFi

Lending Protocol

Lending Protocols

Lending protocols in the DeFi world allow people to loan or lend money in a peer-to-peer manner, i.e. without the banking middleman. These loans are secured by the lender over-collateralizing the loan and the terms of the loan being managed in a smart contract. This gives the unbanked or those who have poor credit the ability to take loans, and it gives those with excess capital the opportunity to provide loans in a secure and trustless manner, and to earn income from them.

Over-collateralization means that the person receiving the loan locks up more than the value of the loan to secure it e.g. if they want to loan 100 they must lock up 150. How much they over-collateralize the loan by, and which tokens they use as collateral, depends on the platform. Some platforms only accept stablecoins, and other accept a variety of crypto assets. Typically, an individual uses one asset for collateral and takes a different asset as their loan.

An important factor in all loans is the interest rate and the length of the loan. These vary greatly by lending protocol, and loans can have fixed interest rates and periods, or infinite periods with interest rates that fluctuate throughout the loan period, fluctuating based upon the utilization rate of the pool of funds the loan was drawn from.

Importantly, the receiver of a loan is expected to maintain a certain ratio of collateral to loan, meaning that if the value of their collateral drops below that of their collateral to loan ratio, they need to add more collateral to keep the required balance. If they don’t keep up the collateral ratio they face liquidation and the loss of their collateral.

To "become the bank" those with idle tokens can deposit them into a lending protocol and earn from the interest derived from the loans their tokens are used to facilitate. Usually this deposit requires a lockup period of a certain length of time. Often, the longer the lockup period the higher the percentage return for the depositor.

DAO

If a project on Cardano operates with a DAO that you’ll find it tagged and listed on this page. All of these Cardano DAO projects have, in some form or another, incorporated or plan to incorporate a DAO. Not all of them will be full autonomous and this may be for one of many reasons, be it that features are being released gradually, that they will never actually be a full and proper DAO (and this a debate for another time).

There are specific Cardano DAO projects listed here, and these are those that operate as a full DAO, who’s direction is guided by the votes of its members. Others on here are projects and protocols built on Cardano, and these can take various forms, including: DeFi projects, NFT projects, and gaming projects.

Regarding full Cardano DAO projects, these have been created around many different topics, the most popular being Cardano investment DAOs that invest in Cardano NFTs and tokens. However, there are other DAOs focused around things such as the development of open-sourced tooling, the growth of the DAO idea itself, and art.

How Fluid Tokens Works

DAO

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