Debt Transfer

What is the Debt Transfer?

Lender can initiate debt transfer for a non-defaulted loan at any time. Once a loan initiates debt transfer, the new lender has the option to decide whether to take over the loan. Third parties can also match the loan with a corresponding lending offer to update the loan's lender information. We refer to this process as "Debt Transfer."

lender initiate debt transfer for a loan

Sometimes lenders may want to reallocate their assets and recover a portion of the loan. When there are no suitable lending offers available in the market for refinancing, lenders have the option to initiate debt transfer for a loan and search for a new lender in the market to take over the loan.

Only loans with Indefinite Loan Duration can initiate debt transfer.

Liquidate and debt transfer duration

Once a loan initiates debt transfer, during the debt transfer duration, the new lender or a third party can also transfer the debt. If the debt transfer duration is exceeded, the loan will default, and the lender can liquidate the loan to obtain the collateral.

The debt transfer duration is set to a default of 48 hours in the protocol.

new lender or other transfer a debt.

The new lender does not need to have a lending offer before transfer a debt. They only need to provide a suitable loan rate. During the debt transfer process, the operator will assist the borrower in repaying the debt to the original lender, thereby becoming the new lender.

Before transfer debt , the other needs to search for a suitable lending offer in the market. The owner of the lending offer, who is the lender, will step in to repay the debt on behalf of the original borrower. The owner of the lending offer will then become the new lender.

Rate limit during debt transfer

When a loan initiates debt transfer, the protocol will have a rate limit in place. If a debt transfer needs to be completed, the new rate for the loan must be lower than this rate limit.

The limit rate$R_l$ follows the model:

if $(T_c-T_s)/T_d<4/5$, $R_l=R_o$

if $(T_c-T_s)/T_d>4/5$, $R_l = S_l*(T_1-T_2)+R_o$

The current debt transfer time $T_1=T_c-T_s$

The rate limit starts increasing at this time $T_2=T_d*4/5$

The rate limit increasing slope $S_l=(R_m-R_o)/(T_s+T_d-T_2)$

The old rate of the loan $R_o$

The max rate $R_m$

The debt transfer duration $T_d$

The time start debt transfer for a loan by lender $T_s$

The current time $T_c$