Borrowing

Borrowing

Users who want to borrow at a fixed interest rate can mint -ve wtokens and sell it for currency. By selling -ve wtokens for currency, borrowers receive the currency in exchange for the obligation to repay a fixed amount of currency at a specific future time. First, a borrower deposits collateral into their Kulfi portfolio . Then the borrower mints a -ve wtokens tokens at their chosen maturity. The borrower can now sell the -ve wtokens into its liquidity pool in exchange for currency.

Now the borrower has currency they can withdraw and a future obligation to repay a fixed amount of currency collateralized by their assets.

As the loan approaches maturity, the borrower can either repay the loan or roll it forward to a future maturity. If the borrower doesn't repay the loan or roll it forward prior to maturity, a third-party can roll the borrower's debt to the nearest maturity on their behalf at a penalty interest rate.