# Introduction Hold your NFTs while staying liquid. ## Crypto needs efficient debt solutions
The current problem with NFTs is that they **lock your wealth into an asset that usually is not able to generate yield** like other digital assets. The lack of liquidity in the market is detrimental for holders as it means that they may have difficulty selling their NFTs. This leads to NFTs being sold at a discount or not being sold at all, which is a problem if you need to access your capital in the short-term, or if you need to cover unexpected expenses. These conditions become problematic if we pretend DeFi users to get the most out of their portfolios by being capital-efficient with their non-fungible assets. And for that to occur in the first place, NFTs need to be accesible and affordable: currently, the lack of financing solutions to acquire NFTs diminishes demand. There's a need of 'Buy-Now-Pay-Later' solutions to drive financial inclusion and NFT adoption. The opportunity cost of locking up your capital in NFTs could leave you out of new opportunities. Selling them, then? Well, you will miss out on a ton of upside potential... and trigger a tax event. Now more than ever, you need to be efficient to keep up with the fast pace of the industry and preserve your capital. And for that, we need to unlock novel NFT finance solutions. ## Unlock the future of the digital economy Unlockd gives you access to additional capital while maintaining ownership of your NFTs, so you can benefit from extra yield opportunities, diversify your crypto portfolio, buy more JPEGs, expand your P2E resources, leverage your trading or even buy a house in the real world. **Without selling any of your NFTs**. Unlockd emerges to be the interconnected highway that allows liquidity to flow between blockchains, protocols and communities — building a solid intersection between the NFT industry and DeFi. Like lego pieces, our technology also allows for symbioses with marketplaces, DeFi protocols requiring collateral for applying leverage, renting protocols, guilds, P2E games, yield aggregators and a myriad of other decentralized applications. Instead of using fungible tokens as collateral for loans, which is suboptimal since you lock liquid tokens to get other liquid tokens, Unlockd lets yo turn illiquid assets into productive, liquid ones. And that's how efficient debt works with physical assets. Now, in crypto. This opens the gates to the **true financialization of NFTs**, with unprecedented financial products in the history of the economy, involving instant collateralizations to get 'Buy-Now-Pay-Later' solutions and new strategies focused on cross-chain efficiency that you, our community, will help us discover. And, for an extra spin, getting a loan against your NFTs does not trigger a tax event, whereas selling them for liquidity does. Tax-efficient fuel for your portfolio without selling your assets. **With Unlockd, options are limitless.** # What is Unlockd? Instant, safe loans against your NFTs while keeping their utility. Unlockd is a decentralized non-custodial liquidity protocol where users can participate as depositors or borrowers: it facilitates the safest, most secure, and cost-effective way to borrow against NFTs with instant, permissionless loans, as well as risk-free, auto-compounding yield directly in ETH for lenders. **Instead of using fungible tokens as collateral for loans, which is suboptimal since you lock liquid tokens to get other liquid tokens, Unlockd lets you turn illiquid assets into productive, liquid capital.** It is, at its core, a set of smart contracts deployed to the Ethereum Mainnet, where depositors lenders deposit their assets in pools to receive yield in exchange for their liquidity contribution. This is a Peer-To-Pool model, more efficient and fair than other Peer-To-Peer models. Borrowers take permissionless loans with no fixed expiration date, instantaneously, with a fair interest rate, and against their ERC721 NFTs — if they are part of the eligible collections. These loans will operate cross-chain in the future, so the collateral and the borrowed tokens may reside in different chains. ## Who uses Unlockd? Unlockd is the protocol that unlocks the full liquidity and utility of the digital assets economy. Our lending and borrowing market allows DeFi, Art, Real-World and Gaming users to enjoy extra liquidity while holding their NFTs with an **NFT-backed, secure and instant loan.** * **Art collectors:** Navigate art acquisition with financial flexibility: avoid tax events associated with selling by borrowing against your art with asset-wise appraisal and lowest interest rates while keeping ownership and display rights. * **DeFi users:** Make the most out of your idle crypto through boosted APYs on deposits at our robust, audited, and secure protocol, or, in the future, leverage your positions from other DeFi protocols to access additional funds to compound, hedge or diversify. * **Investors**: Enjoy the highest degree of capital efficiency and safety for your investments, bundling NFTs appraised individually from different collections as common collateral with maximum borrowing power and minimum liquidation risk thanks to our industry-unique data framework. * **Guilds**: Turn your yield-generating and idle resources into productive assets to optimize working capital, soon borrowing against baskets of in-game items while using them in-game to keep operating at full capacity, scale operations and onboard new players. *Read their testimonials at our website:* {% embed url="" %} ## Everything you need to know, in a nutshell. * In Unlockd, lenders deposit their assets in pools to receive yield in exchange for their liquidity contribution. This is a Peer-To-Pool model, more efficient and fair than other Peer-To-Peer models. * Borrowers take permissionless loans, with no fixed expiration date, instantaneously, with a fair interest rate, and against their NFTs — if they are part of the eligible collections. These loans will operate cross-chain in the future, so the collateral and the borrowed tokens may reside in different chains. * The accrued interest is used to pay lenders’ yields. Currently, there are no fees applied to transactions. In the future, such fees will be included, and used to distribute rewards to token holders and grow the DAO treasury. * We are working in a 'True Ownership' feature, still in development: Borrowers maintain 100% of the utility of their NFT by still owning their collateral, which means that they will remain eligible for potential drops and will continue to have access to all the advantages they enjoy when they are not using their NFTs as collateral. Of course, they won't be able to sell or transfer the NFTs while being used as collateral. * The NFT price assessment is performed externally by world-class appraisal partners that use Machine Learning to price individually each collateral, without using floor prices. We use multiple sources of data blended into our own models. * The Unlockd protocol of smart contracts is robust and secure (audited by Halborn, world-leading firm) and doesn't rely on features that have being proven failure points in other NFT-backed lending protocols (i.e., asset bridges). Our source code is open-source and peer-reviewable. * To ensure the utmost security also in terms of market and counterparty risk, the Unlockd's Data Science team has developed a custom Risk Framework that develops in-depth mathematical models to cover Asset and Liquidity risks and provides a Dynamic Loan-To-Value for each independent NFT depending on multiple ingested variables. * A robust Liquidation Process has being designed to minimize liquidation friction and have multiple independent liquidation options to always choose the optimal route that brings the best outcome to the users of the protocol. * Unlockd's seamless integration with hashmail enables customizable notifications to keep you informed about your investments. By following a few easy steps, you can opt to receive these notifications across your preferred web2 channels - an excellent way to stay updated on health alerts, NFT auction notifications, and future value-added services. * Unlockd Marketplace allows for the listing or auction of NFTs, even with attached debt. This feature offers a dual advantage - buyers can acquire desirable NFTs at a potentially reduced price, while sellers can transfer their loan obligation along with the NFT. * Unlockd is in its path to decentralize progressively to the Unlockd DAO, with fair tokenomics and a governance model that follows that of the best decentralized protocols out there. Our Policy Team ensures that Protocol, Market and Incentives Policies are always aligned with our users' best interests. * Unlockd is backed by world-class investors ($4.4M seed round) and trusted by dozens of gaming guilds with hundreds of millions of dollars in AUM. Our tech ecosystem is formed by multiple infrastructure partners that integrate our lending solution into marketplaces, rental protocols and other innovative NFT finance products. * Unlockd has sold out its genesis NFT collection, 3500 NFTs that bring to life the universe of Unlockd and serves as a vehicle for forging lasting bonds with community members while allowing them to be early testers and receive unique rewards. * You can join our 100,000+ member community and follow us in 7 different social media channels. # Why is Unlockd different? The next move in NFT finance ## Pools 👍 vs Peer-To-Peer 👎 Peer-to-peer NFT-backed loans work by allowing borrowers to display in the marketplace their NFTs as collateral for a loan. Lenders can then choose to offer a loan to the borrower based on the value of the NFTs. The borrower can accept the terms of the loan and then receive the capital, with a high interest rate and a fixed expiration time. This agreement usually takes too much time. Although this initial model tries to meet the basic demand of NFT-collateralized debt, it suffers from many limitations : a clear **lack of efficiency** matching supply and demand, **inflexible** maturity periods, and **higher interest** rates that do not fit the real market needs, due to the limited liquidity nature of this model. Our Liquidity Pools (Peer-To-Pool model) are the answer. Learn more [here](/unlockd-v1/protocol-mechanics/liquidity-pools). ## Algorithmic appraisal 👍 vs Floor price 👎 Most NFT-backed lending protocols obtain the NFT valuation based on the floor price of each collection. The value given to each NFT is related to the lowest price recorded for a specific collection, resulting in limitations on LTV since lenders will be willing to lend less capital and the APYs to be paid for erasures will be very high, thus creating a highly inefficient and illiquid market. Non-Fungible-Token should be valued independently: our appraisal mechanism relies on several third-party tools specialized in ingesting historical sales data and NFT metadata to construct features based on this information to generate accurate, reliable, individual pricings. Learn more [here](/unlockd-v1/protocol-mechanics/nft-appraisal). ## Robust risk framework 👍 vs Unexpected liquidity crunches 👎 We have conducted a deep analysis on the extreme events that occurred on other NFT-backed lending protocols involving liquidity crunches and loan insolvencies, and have adjusted all our protocol parameters to ensure even the most unexpected events would not have a critical impact on the protocol reserves. Our lenders security is and will remain to be our top priority. In order to ensure it, we have designed the [risk framework](https://unlockd-1.gitbook.io/risk-framework/asset-risk/introduction) with variable and volatile asset characteristics in mind. All parameters adjust themselves based on market conditions and, if needed, can be updated by DAO proposals in the future. Constant simulations are being run to forecast the protocol’s behaviour in every possible scenario. ## Optimized liquidations 👍 vs Underselling collaterals 👎 In the event that the price of a collateral drops to the point where the solvency of the loan is compromised, NFT-backed lending protocols must liquidate the NFT to ensure that liquidity is returned to Lenders. Most protocols only rely on an in-house Auction that receives little traffic and interest, so the collateral ends up being sold well below its price resulting in bad debt for the protocol. Unlockd has a system that calculates in each situation the optimal liquidation setup, through traditional Auctions, Dutch Auctions with several variants and instant liquidation schemes through External Liquidation Pools. Plus, our followers and community members get notified when they can buy or bid for a collateral for a (safe for the protocol) discount. Learn the complete process flow [here](/unlockd-v1/protocol-mechanics/liquidations/liquidation-process/external-liquidation-gateways). ## Non-custodial 👍 vs Losing ownership 👎 {% hint style="warning" %} This feature is still in development. {% endhint %} What’s the point of mitigating the opportunity cost of buying an NFT if you lose the exclusive benefits of holding it? What good is the liquidity you unlock with a loan if you block your access to a potential airdrop? At Unlockd we are committed to unlocking all the utility and liquidity of your assets. Keep full access to airdrops, yield, in-game perks, allowlists and all NFT holder utilities, while using it as collateral. Learn more [here](/unlockd-v1/protocol-mechanics/true-ownership). ## Cross-chain 👍 vs single-chain 👎 {% hint style="warning" %} This feature is still in development. At the moment, the Unlockd protocol only operates on the Ethereum chain. {% endhint %} Unlockd is being developed as a cross-chain NFT-backed lending protocol, which means that the NFT deposited as collateral and the tokens borrowed won't need to be on the same chain. When you want to borrow involving different chains in a protocol that does not feature cross-chain technology, the process is slow and costly. **For example, currently**: *if you have a NFT in Ethereum and you need ETH in Polygon for a new opportunity, you have to collateralize your NFT in the Ethereum chain, get the liquidity and transfer it through a bridge and then consider your next operation. And every time you want to repay part of the loan... the same tedious procedure in reverse!* **You should be able to:** *borrow ETH on Polygon against your Ethereum NFT or MATIC on Ethereum against your Polygon NFT instantly, hassle-free.* With Unlockd cross-chain liquidity, your uncommon investments will become the fuel you need in the protocols you use, with just a couple of clicks. # Team and Advisors {% tabs %} {% tab title="Core Team" %} Our core team comprises a mix of successful serial entrepreneurs, crypto experts, NFT collectors, growth specialists and talented developers. ### Business & Operations [Jorge Schnura](https://www.linkedin.com/in/jorgeschnura/) - Founder, CEO [Carlos Otermin](https://www.linkedin.com/in/carlosotermin/) - Founder, COO [Tamara Lerner](https://www.linkedin.com/in/tamara-lerner/) - Operations Manager ### ### Development [Filipe Venancio](https://www.linkedin.com/in/fepvenancio/) - Tech Lead [Daniel Martín](https://www.linkedin.com/in/damarnez/) - Sr. Blockchain Dev [Enric Borrallo](https://www.linkedin.com/in/eborrallo/) - Solidity Dev [Adrià Pajares](https://www.linkedin.com/in/adria-pajares/) - Cybersecurity Specialist [Alejandro Roigé](https://www.linkedin.com/in/alejandro-roig%C3%A9-v%C3%A1zquez-608bb4210/) - Data Scientist [Manuel Barzi](https://www.unlockd.finance/_next/image?url=https%3A%2F%2Fcdn.sanity.io%2Fimages%2F5qqgs8mw%2Fdb-unlockd%2F9c9951b78036e5c69043d869046669428714aa45-2312x2312.jpg%3Fw%3D512%26q%3D100\&w=2048\&q=75) - Sr. Frontend Dev [Federico López](https://www.linkedin.com/in/federico-lois-l%C3%B3pez-eikilis-a3374812b/) - Frontend Dev ### ### Marketing [Bernardo Bouzas](https://www.linkedin.com/in/bbouzas/) - Head of Community [Roger Guardia](https://www.linkedin.com/in/rogerguardia/) - Creative Lead [Antonela Scoponi ](https://twitter.com/antonianela)- Marketing Manager [KAF](https://twitter.com/kafcrypto) - Researcher & Content Copywriter {% endtab %} {% tab title="Advisory Board" %} ### Gabby Dizon ([🔗](https://www.linkedin.com/in/gabbydizon/)) Founder and CEO of **YGG** (Yield Guild Games) ### Colin Goltra ([🔗](https://www.linkedin.com/in/gabbydizon/)) COO of **YGG** (Yield Guild Games) and seasoned NFT collector. ### Ben Noble ([🔗](https://www.linkedin.com/in/benjaminmnoble/)) Founder and CEO of **Multiplied** ### ### Olga Vázquez ([🔗](https://www.linkedin.com/in/olgavazquez/)) Principal at **Theta Capital** ### ### Leah Callon-Butler ([🔗](https://www.linkedin.com/in/leahcallonbutler/)) Founder and CEO of **Emfarsis** ### Josep Bové ([🔗](https://www.linkedin.com/in/josep-bov%C3%A9-50381916b/)) Software Engineer at **AAVE** and blockchain specialist. {% endtab %} {% endtabs %} # Lenders Unlike peer-to-peer loans marketplaces, Unlockd operates with a much more efficient system of pooled liquidity. Unlockd's liquidity pools are smart contracts responsible for locking tokens, ETH for instance, to ensure the liquidity of those tokens to be borrowed by users when they take out a loan. {% content-ref url="/pages/pOpqTLKY43svt2oWTdvS" %} [Liquidity Pools](/unlockd-v1/protocol-mechanics/liquidity-pools) {% endcontent-ref %} ### Deposit liquidity Users of these pools, known as lenders, provide tokens to the smart contract for as long as they wish and receive [uTokens](/unlockd-v1/protocol-mechanics/liquidity-pools#ueth), representing their share in the pool. You can deposit any amount you want; there is no minimum or maximum limit. Still, it's important to consider that for really low amounts the transaction cost of the process might be higher than the expected earnings. It is recommended that you consider this when depositing very low amounts. ### Earn yield uToken holders receive continuous earnings that evolve with market conditions. Each asset has its own market of supply and demand with its own APY (Annual Percentage Yield) which evolves with time. This yield comes from the interest that [borrowers have accrued](https://risk.unlockd.finance/liquidity-risk/borrow-interest-rate) when they repay their loan, and may include UNLK token rewards in the future. ### Auto-compound earnings Unlockd's lending pools are designed to maximize your earnings and optimize the taxation derived from your profits by providing liquidity. When you deposit your assets and receive yield, it is automatically reinvested in the pool to compound and grow your return exponentially. ### Withdraw assets When you wish to withdraw the liquidity you are contributing you only need to return the uTokens you received when you deposited your liquidity. These tokens are burned by the protocol and you then get your assets back. You would need to make sure there is enough liquidity (not borrowed) in order to withdraw, if this is not the case you would need to wait for more liquidity from lenders or borrowers repaying. ### Minimized Lenders' Risk The main risk of providing this type of liquidity lies in the unlikely event that the borrower defaults and, upon liquidating its collateral, the volatility of the market results in the protocol receiving for it an amount lower than the original amount of the loan plus accrued interest. In that case, the liquidated collateral would not be sufficient to provide the stipulated yield or sometimes repay the lenders. In the future, Unlockd's Multi-NFT Collateral will allow borrowers to provide as collateral several NFTs from different collections, minimizing the risk of liquidation. Even in the event of a [liquidation](/unlockd-v1/protocol-mechanics/liquidations), the lending pools model mitigates this risk effectively by diluting the impact of these unusual events across the many users that make up our robust pool. Additionally, our liquidation and [Dynamic LTV](https://risk.unlockd.finance/asset-risk/dynamic-loan-to-value) determination models are designed not to reach this point in the absence of extreme market conditions. In the case of a liquidation, our [smart liquidation system](/unlockd-v1/protocol-mechanics/liquidations/liquidation-process#liquidation-marketplace) calculates in each situation the optimal liquidation setup, through traditional Auctions, Dutch Auctions with several variants and instant liquidation schemes through [External Liquidation Pools](/unlockd-v1/protocol-mechanics/liquidations/liquidation-process/external-liquidation-gateways). # How to lend
From the Earn section, you will see the tokens currently supported by the Unlockd protocol, and you will be able to deposit the amount of tokens you wish in exchange for an APY. If you have not deposited anything yet, you can do it from the Earn button:
From this modal screen you will be able to enter the amount you wish to add to the liquidity pool, and that at that moment you have in your linked wallet. If it is the first time you deposit that token in the protocol you will have to make an Approval of that token and pay the corresponding fees. From that moment on you will not have to sign the Approval again. Once the Approval is completed, you will be able to select the Supply button and add funds to the pool.
Once you have added funds, you can withdraw all or part of them at any time from the Withdraw option in the main screen of the Earn section.
# Borrowers Selling your NFTs means losing the potential upside value gain, triggering a capital gains tax event. By depositing your NFTs as collateral, you are able to obtain liquidity (working capital) without selling your assets, not incurring capital gains taxes. ### Deposit your NFT as collateral Before borrowing, you need to deposit one (or several, in the future) NFTs from the eligible collections to be used as collateral. Our [appraisal model](/unlockd-v1/protocol-mechanics/nft-appraisal) will instantly assess the value of this asset. This value will dictate how much you can borrow, along with other factors in our [Dynamic LTV](https://risk.unlockd.finance/asset-risk/dynamic-loan-to-value) calculation. When you provide an asset as collateral, you will receive a [uNFT](/unlockd-v1/protocol-mechanics/instant-loans#unft), an ERC-721 token, representing your deposited NFT. ### Borrow assets Simply head to the Borrow section and select the asset you want to borrow. Set the amount to be borrowed you need based on your available NFTs that could be used as collateral for the loan, and constrained by the [Loan-To-Value ratio](broken://pages/QdnU1jsxRR2cYmU592b3). Currently, you need to take one isolated loan for each NFT you want to borrow against. ### Keep collateral utility {% hint style="warning" %} This feature is still under development and is expected to be deployed with Unlockd V2. {% endhint %} With [True Ownership](/unlockd-v1/protocol-mechanics/true-ownership), Borrowers are still eligible for airdrops, exclusive access, play-to-earn games perks, DAO governance or whatever utility the NFT deposited as collateral has. An early version of True Ownership is available to Borrowers thanks to the utility of the [uNFT](/unlockd-v1/protocol-mechanics/instant-loans#unft). This non-approvable, non-transferable debt token represent a receipt of your loan. ### Repay the loan You repay your loan in the same asset you borrowed. For example, if you borrow 1 ETH you will pay back 1 ETH + interest accrued. The interest rate you pay for borrowing assets depends on the borrowing rate derived from the asset's supply and demand ratio. When you repay the loan, you return the uNFT that was issued when you deposited your collateral, and your pledged NFT will be released so that you can transfer it normally to any other wallet or contract. There is no fixed time period to pay back the loan. As long as your position is safe, you can borrow for an undefined period. However, as time passes, the accrued interest will grow, making your [health factor](broken://pages/yVSNUTDwW36j2nzlv4I5) decrease, which might result in your deposited assets becoming more likely to be [liquidated](broken://pages/Lz5qO5Jldzn6MJreghdh). ### Avoid liquidation In order to avoid the reduction of your health factor leading to liquidation, you can totally or partly repay the loan. In the future, you will also be able to deposit more NFTs as collateral in order to increase your health factor. Out of these two available options, repaying the loan would increase your health factor more. Even if your loan unhealthiness triggers a [Liquidation](/unlockd-v1/protocol-mechanics/liquidations) event, you will still have time to repay thanks to the [Borrower Grace Period](broken://pages/Lz5qO5Jldzn6MJreghdh#borrower-grace-period). ## Learn more: {% content-ref url="/pages/qkwkvEjRsm4V9vcdNUvN" %} [Instant Loans](/unlockd-v1/protocol-mechanics/instant-loans) {% endcontent-ref %} {% content-ref url="/pages/jMgeOkCXlspZemYbzCnJ" %} [How to borrow](/unlockd-v1/unlockd-at-a-glance/borrowers/how-to-borrow) {% endcontent-ref %} # How to borrow In the Borrow section you will be able to see which NFTs you have in your wallet that are supported in the protocol to be used as collateral to borrow against the protocol tokens. You will also be able to see your loans if you have already made a deposit of an NFT in the My Loans section below:
### Deposit an NFT and borrow against it After selecting the Deposit NFT option, you will see that you can select the NFT you want to use as collateral, and you will automatically see its Valuation, LTV and the amount it is available to borrow:
Once you have selected the one you want, select Continue and you will be able to select the amount you want to borrow. At the bottom you will see the Health factor. The higher the amount of loans you borrow, the lower the health factor. Your position will be safe as long as that amount is not less than 1.00, at which time the protocol will proceed to liquidate that Loan, giving you 24h to pay back the debt partially or totally before it is sold to other bids in the market from the My Auctions section.
Once you have selected the amount you wish to borrow, select Continue and you will have to perform the Approval of the Valuation of your NFT. In case this is the first time you use the token you have selected to borrow (in this case ETH) and you have not approved that token before, you must also perform the Debt Token Approval. In case you have not approved that particular NFT collection in the protocol before, you will also be asked for the Collection Approval:
Once all approvals are completed, you can proceed with the Borrow:
When you pay the corresponding fees and finish your Borrow, you will return to the Borrow section home screen and you will be able to see it in My Loans. There, you will find the Borrow options (to borrow more at any time as long as the protocol allows it) and Repay, where you can partially or fully repay the loan.
# Liquidators The Liquidation Process allows third parties to participate in the health of the overall protocol by acting in their own interest (to receive the discounted NFT) and as a result, ensure loans are sufficiently collateralized. Unlockd has a system that calculates in each situation the optimal liquidation setup, through traditional Auctions, Dutch Auctions with several variants and instant liquidation schemes through External Liquidation Pools. Our followers and community members get notified when they can buy or bid for a collateral for a (safe for the protocol) discount. Everyone can participate in these liquidations. As an independent liquidator, you can currently only bid in active Auctions to acquire a NFT at a discount. Dutch Auctions are still a feature under development. #### **FIRST BIDDER REWARD** The first bidder will receive a reward (**bidFine**) that is dynamic depending on the auctioned NFT price to incentivize bidding kickoff. The higher the price, the smaller the percentage received as a reward. This reward only applies if there is a second bidder (who pays the bidFine) or the Borrower repays the debt + bidFine to save the liquidation and cancel the auction. Learn more about the Liquidation Process: {% content-ref url="/pages/uk9Z5hZH216SwbxIN7su" %} [Liquidation Process](/unlockd-v1/protocol-mechanics/liquidations/liquidation-process) {% endcontent-ref %} # How to liquidate In the Auctions section you will find four sub-sections: Loans in Auction, Health Factor List, Auction history, and My Auctions.
{% tabs %} {% tab title="Loans in Auction" %} In this subsection, you will see all the loans that at this moment are about to be liquidated because their health factor is below 1.00, available to bid for them. If the NFT is yours, you will have a variable margin to make Redeem (Borrower Grace Period), partially returning the loan so that its health factor rises above 1.00 and leaves the liquidation zone. The maximum amount you can repay is 90% of the loan (If you want to recover your NFT in your Wallet you can do it from the My Loans section of the Borrow section, through the Repay option).
If the NFT is not yours you can bid for it from the Place a bid option, and the protocol will indicate the minimum amount you can bid. In case you want to know the status of your bid, you will be able to see it from the My Auctions subsection. {% endtab %} {% tab title="Health Factor List" %} In this sub-section you can see, from lowest to highest, all the health factors of all the active loans in the protocol, as long as they have a Health factor equal or higher than 1.00. If it is lower, they will not appear here but will be in the Loans in Auction sub-section.
{% endtab %} {% tab title="Auction History" %} In this sub-section you will be able to see the history of transactions that have been made in the protocol, viewing their token ID, image, the final bid price, the address that won the bid, and the exact date and time of the transaction.
{% endtab %} {% tab title="My Auctions" %} In this subsection you will be able to see the status of your bids when you have participated in any Auction. In case you have placed a bid and won the Auction, you will be able to claim the NFT through the Claim option. If you have participated in an Auction, and it is still active and your bid has not been improved by another bidder, you will see the status Ongoing. If your bid has been improved by another bidder, you will see the status Failed Auction.
Whenever you have made any transaction in the protocol, in this case a Claim of an NFT of a won Auction, you will see a modal screen where you will see that you have made the transaction, and a link to Etherscan where you will be able to see the transaction:
{% endtab %} {% endtabs %} # Use cases ### NFT collectors & traders Unlock additional capital to expand your art collection without having to sell your assets. You'll still be able to shine your PFP while having the liquidity to hunt for that new drop. Now, the art you own lets you leverage your collection. ### DeFi users To make it big in DeFi you need to be capital efficient. With our Earn program, enjoy the best APYs for your crypto in safe pools. Our robust risk framework ensures that optimal liquidations will be available to protect lenders. ### Investors Access to debt in the physical world is tedious and limited. We do better in crypto. Start making the most of the non-fungible assets you own, and turn your illiquid investments into tax-efficient fuel for your portfolio. ### Gaming Guilds Guilds can turn their yield-generating and idle resources, like creatures or land, into productive assets to optimize working capital. Scale operations, onboard new players, dominate the arena and conquer the GameFi industry with extra liquidity. ## Direct Integrations ### Marketplaces Marketplaces can multiply their volume and improve their users' experience by offering dedicated financing tools directly integrated with Unlockd. Through these debt solutions, buyers can access full or partial mortgages to finance their new NFTs by instantly using them as collateral and/or providing other NFTs to the loan directly from the marketplace. As the user keeps from the very first moment all the perks of their collaterals together with those of the new acquisition, this feature will give rise to highly capital-efficient collecting and investment strategies with a very low gas cost via these NFT marketplaces. Additionally, this novel scheme unlocks an unprecedented amount of additional volume for marketplaces, ultimately making purchasing an NFT more affordable and convenient. ### Rental Protocols Renting NFTs and borrowing against them are two sides of the same coin. Combined, will lead to NFT mass adoption by giving users more choices, increasing liquidity and leveraging the value of their assets. There are several circumstances under which guilds and investors will rent their assets while borrowing against them: idle assets, excess supply of a certain NFT for the current volume of players, or strategic decisions to balance their portfolio to invest in new games. This synergy will make borrowing more efficient **and even allow for the loans to be repaid almost automatically thanks to the revenue generated by the rental.** ### DeFi Protocols Many decentralized protocols allow a myriad of strategies involving leverage. These markets require the deposit of one or more assets as collateral to unlock such leverage. At present this collateral can only be provided in the form of cryptocurrency. Unlockd's direct integration with these protocols will allow you to margin trade and make other leveraged investments by providing the NFTs you own as collateral, directly from the interfaces of the protocols in which you transact.
# Ecosystem # Infrastructure ## Chainlink Chainlink decentralized oracle networks provide tamper-proof inputs, outputs, and computations to support advanced smart contracts on any blockchain. Chainlink allows Unlockd to connect smart contracts with off-chain data and services securely. ## Gelato Network Gelato Network is a Web3 decentralized backend that enables developers to create augmented smart contracts that are automated, gasless & off-chain aware. Gelato Network allows Unlockd to develop robust, on-chain automated systems for the observability of loan statuses and the activation of [liquidation triggers](/unlockd-v1/protocol-mechanics/liquidations/liquidation-process#liquidation-trigger). ## Upshot Upshot is the leading NFT appraisal platform, providing accurate, near-real-time appraisals for 57m+ NFTs from over 32,000 collections. Upshot allows Unlockd to algorithmically [appraise](/unlockd-v1/protocol-mechanics/nft-appraisal) each individual NFT according to different models, input variables, and Machine Learning techniques. ## NFT Bank NFTBank is an NFT portfolio management tool and valuation engine, allowing users to make informed decisions about their NFT portfolio and enable advanced DeFi use cases. NFTBank’s ML-powered NFT valuation engine covers 5000+ projects with high accuracy. NFT Bank allows Unlockd to algorithmically [appraise](/unlockd-v1/protocol-mechanics/nft-appraisal) each individual NFT according to different models, input variables, and Machine Learning techniques. ## Nabu Nabu's advanced machine learning algorithms combine on-chain data, transaction histories, traits, and rarity to provide state-of-the-art price predictions. Nabu allows Unlockd to algorithmically [appraise](/unlockd-v1/protocol-mechanics/nft-appraisal) each individual NFT according to different models, input variables, and Machine Learning techniques. ## Reservoir Reservoir is open infrastructure for trading NFTs across major marketplaces and chains. It includes a universal router for creating and executing NFT liquidity across major marketplaces and within the Reservoir ecosystem. Reservoir provides Unlockd with a modular set of tools that let us to interact with the NFT market at the appropriate level of abstraction for our application, enabling seamless liquidation options in the following marketplaces: 1. opensea.io 2. looksrare.org 3. x2y2.io 4. sudoswap.xyz 5. nft.coinbase.com 6. rarible.com 7. nftx.io 8. foundation.app 9. manifold.xyz 10. zora.co 11. blur.io 12. cryptopunks.app 13. element.market 14. infinity.xyz 15. universe.xyz 16. sansa.xyz 17. ens.vision 18. magically.gg 19. alienswap.xyz 20. sound.xyz 21. atomic0.com 22. rare.id 23. parcel.so 24. metahood.xyz 25. reservoir.market 26. tessera.co ## hashmail hashmail is like Twilio for web3. They help dApps send personalized email communications (updates, alerts, rewards, billing, and reminder emails) to users’ wallet addresses. They deliver these communications across multiple channels — their web/mobile inbox, Telegram, web2 email, and Discord. hashmail allows Unlockd to notify Borrowers when their [Health Factors](/unlockd-v1/protocol-mechanics/liquidations/health-factor) drop from key levels and notify users and the community when a loan needs to be [liquidated](/unlockd-v1/protocol-mechanics/liquidations/liquidation-process) and there are active auctions to bid. These notifications are both on-chain and off-chain. ## Push Protocol Push enables cross-chain notifications & messaging for dApps, wallets, users & more. Push allows Unlockd to notify Borrowers when their [Health Factors](/unlockd-v1/protocol-mechanics/liquidations/health-factor) drop from key levels and notify users and the community when a loan needs to be [liquidated](/unlockd-v1/protocol-mechanics/liquidations/liquidation-process) and there are active auctions to bid. These notifications are both on-chain and off-chain. ## Nexus Mutual Nexus Mutual is a people-powered alternative to insurance that uses the power of Ethereum so people can share risks together without needing an insurance company. Nexus Mutual allows Unlockd to offer our users the possibility of securing risk and potential bugs in smart contract code and covering events like hacks or multi-sig wallet issues. {% hint style="warning" %} This integration is expected to be deployed with Unlockd V2 in the upcoming months. {% endhint %} ## Spectral Finance Spectral Finance creates a programmable creditworthiness ecosystem facilitating capital efficiency on-chain through credit risk analysis. Spectral Finance allows Unlockd to get insight into the Non-Fungible Credit Score of Borrowers and offer them special financial opportunities adapted to their on-chain reputation. {% hint style="warning" %} This integration is expected to be deployed with Unlockd V2 in the upcoming months. {% endhint %} # Integrations ## BlockchainSpace BlockchainSpace allows P2E Guilds to leverage different tools and solutions that provide insights and the decentralized infrastructure needed to scale and optimize operations. Unlockd and BlockchainSpace share a common vision: give Guilds, gamers and investors access to the necessary tools to thrive in the Metaverse, contributing to the development of the NFT infrastructure and Play-To-Earn ecosystem. Through this partnership, we will enable all BlockchainSpace users —guilds and players— to leverage Unlockd solutions directly integrated into BlockchainSpace's tool suite. Learn more: {% embed url="" %} {% embed url="" %} ## NFTBank Besides of being one of Unlockd's third-party [appraisal](/unlockd-v1/protocol-mechanics/nft-appraisal) tools, NFTBank is a smart NFT portfolio management solution. NFTBank continues to build tools that empower NFT investors, creators, guild managers, and scholars. Unlockd is positioning itself as the go-to liquidity-enabling partner for these players within the Metaverse. This alliance leads us to build in the same direction. Users will be able to take loans against their NFTs while browsing the NFTBank's interface and checking the data on those NFTs. Learn more: {% embed url="" %} ## reNFT reNFT allows everyone to build their own rental marketplace on top of their existing infrastructure, improving user experience and project liquidity**.** It is the only rental protocol that can be white-label integrated into any project with any custom-tailored functionality based on the project’s needs developed by their team. Unlockd will integrate with reNFT to allow borrowers also to rent their NFTs while keeping them pledged as collateral in Unlockd with an active loan against them. Coupling both protocols’ utility, users will also be able to generate passive income, as reNFT allows this automatically based on a set of criteria — especially useful for smaller guilds or casual investors that don’t have the time or infrastructure to manage their NFT portfolio actively. Learn more: {% embed url="" %} ## Metabase The Metabase team realized they could help extrapolate value from the blockchain for gamers, providing opportunities for players and guilds, simplifying the onboarding process, and empowering them to improve their earnings and efficiency. Their approach is two-pronged, as they help guilds find players and monitor their performance while allowing players to access new games, efficiently using assets from guilds and obtaining real-world credit or fiat earnings. Unlockd will be integrated into Metabase to allow users to combine other tools in their suite of solutions with the liquidity they can extract from their assets. And all thanks to the NFT-backed loans from our lending market. Learn more: {% embed url="" %} ## RentaFi RentaFi is a non-collateral NFT rental protocol that enables asset management by splitting NFTs into use-value and exchange-value, oriented towards composability with other protocols like lending Unlockd will integrate with RentaFi to provide access to these tools to our users. RentaFi will provide Unlockd with an API/SDK, multi-chain L2 support, including a dashboard for collections and guilds in order to expand NFT rentals more widely. Learn more: {% embed url="" %} ## Playdex Playdex is working on enabling NFT rentals for dozens of games, allowing any user to rent out assets for any period of time**.** This flexibility to choose their terms (amounts, rates, duration, etc.) perfectly aligns with Unlockd’s philosophy and methodology, making the Unlockd x Playdex integration the logical next step for the growth of both projects and the ecosystem as a whole. The Unlockd x Playdex partnership will make it easy for NFT owners to seamlessly rent their assets and borrow against them, unifying previously fragmented and informal transactions and driving transparency and efficiency. Learn more: {% embed url="" %} ## Stash Stash is an NFT Gaming marketplace that enables easy rentals and lending for gaming. They want to provide more alternatives and solutions for gamers, allowing them to rent NFTs for use or lend their NFTs to other members for a share of earnings. Their network-led marketing has helped build a strong community, an ecosystem Unlockd is pleased to join by offering our NFT-backed loans. Together, we will continue to build composability and drive strong use cases for the NFT community and especially all GameFi projects out there. Learn more: {% embed url="" %} # Power Users Unlockd is the protocol that unlocks the full liquidity and utility of the digital assets economy. World-class guilds, DeFi users, investment DAOs and seasoned collectors have partnered with Unlockd to improve the efficiency of their portfolios, preserve their capital and stay liquid to invest in new opportunities or cover unexpected expenses without selling any of their NFTs. ## Gaming guilds
# Investors Unlockd has raised a US$4.4M seed round amidst the recent cryptocurrency market crash to unlock the full liquidity and utility of the digital asset economy. Despite having increased both the capital to be raised and the valuation, we are proud to say that Unlockd received offers oversubscribing for more than 3x. This funding comes from some of the most reputable firms and angel investors in the industry: * Blockchain Capital (LEAD) * Sfermion * Spartan Group * Play Ventures * IDEO CoLab * Bitscale * Sanctor Capital * Eden Ventures * Caballeros Capital * Emfarsis * Crypto Plaza * YGG (Yield Guild Games) * YGG SEA * BREEDER DAO * Blockchain Space * Gabby Dizon (YGG Founder) * Colin Goltra (YGG COO and NFT collector) * Peter Ing (BlockchainSpace Founder) * Renz Chong (BreederDAO Co-Founder) There is interest in our product, and we are turning our vision into a working protocol backed by many of the best investors in the industry. > “Unlockd is the missing piece DeFi debt markets need to evolve to their optimal state with a size equivalent to traditional finance. Enabling the use of illiquid assets and future cash flows as collateral is an industry game-changer that will bring to DeFi both institutional and mainstream retail investment.” — Jorge Schnura, Unlockd Co-Founder ## Meet our investors **Blockchain Capital (LEAD)** Blockchain Capital is a leading venture firm in the blockchain industry. In the last 8 years, they have made over 125 investments in companies and protocols in the sector, across different stages, geographies and asset types. Blockchain Capital leads this seed round of Unlockd. **Sfermion** Founded in 2019, Sfermion is an investment firm focused on the metaverse. Their goal is to accelerate the emergence of the metaverse by investing in the founders, companies, and protocols creating the infrastructure and environments that will form the foundations of our digital future. **Spartan Group** Spartan Capital is a digital asset management firm that takes a fundamental approach to identifying unique investment opportunities in the emergent crypto asset class. Their investment team has over 20 years of experience in investment research and capital management for top-tier firms such as Goldman Sachs and Indus Capital. **Play Ventures** Play Ventures is the leading early-stage VC fund investing in gaming and gaming services startups around the world. The fund was founded in 2018 by former gaming entrepreneurs Henric Suuronen and Harri Manninen. **IDEO CoLab** IDEO CoLab Ventures invests in early-stage distributed web startups and co-creates with them to ship new products and protocols. CoLab works across industries at the intersection of emerging tech, societal systems, and human needs. **Bitscale** Bitscale invests in teams and solutions that bring transparency and efficiency to our world with cutting-edge technologies. They also help with investors relations, community building — by increasing awareness and brand exposure in Russia/CIS as well as in Asia — and post-launch support and advisory. **Sanctor Capital** Sanctor Capital is a thesis-driven investment fund and deploys capital across both primary and secondary markets. As founders and crypto natives themselves, they understand the challenges faced by early-stage projects and provide active investor-side support through mentorship and network integration. **Ed3n Ventures** Ed3n Ventures is a leading web3 venture studio, dedicated to building projects that enable the open metaverse. They work with founders to provide expertise, funding, and access to Eden’s strategic network of advisors and partners. Aside from their web 3.0 ventures, Ed3n has also been actively building and growing a portfolio of e-commerce and tech startups in Southeast Asia over the past decade. **Caballeros Capital** Caballeros Capital is a private investment firm focused on investing in the blockchain innovation space. **Emfarsis** Emfarsis is an advisory and investment firm based in Asia Pacific focused on crypto, NFTs, open Metaverse and Web3 innovation for social impact. Whether it is international expansion or moving into the metaverse, they splice economic data with real-life human stories to help identify the market opportunity. **Crypto Plaza** Crypto Plaza is the largest crypto economy hub in Southern Europe. Based in Spain, it is a community of the leading companies, startups and investors in the sector. They are a worldwide reference in the Crypto Assets and Blockchain space, and lead the Spanish-speaking and Southern European market. **YGG (Yield Guild Games)** YGG is the world’s leading Play-To-Earn guild that brings players together to earn via NFT games. They are the settlers of the Metaverse and invest in GameFi-related projects. **YGG SEA** YGG SEA is the first subDAO of Yield Guild Games, with the mission of creating the biggest and most sustainable play-to-earn virtual economy in Southeast Asia. **BreederDAO** BreederDAO is the NFT asset factory of blockchain games. They provide high-volume asset production, tailored to specification, for some of the largest guilds in the Metaverse so they can supercharge their play-to-earn economies. **BlockchainSpace** BlockchainSpace is a guild hub for play-to-earn communities, with end to end solutions including CRM, Guild Data Analytics and Guild Financial Bank. **Notable angel investors** * Gabby Dizon (YGG Founder) * Colin Goltra (YGG COO and NFT collector) * Peter Ing (BlockchainSpace Founder) * Renz Chong (BreederDAO Co-Founder) ####
####
# Liquidity Pools Contrary to the inefficient Peer-To-Peer model, the Unlockd liquidity model relies on Liquidity Pools. Users contribute their assets to a large pool of liquidity called the Lending Pool. This pool is available for borrowers to borrow from, and lenders share in the interest that borrowers pay back to the pool. ## uETH One of the advanced features of the lending pool contract is the tokenization of the lending position. When users deposit assets, they receive a corresponding amount of uTokens (uETH in the case of providing liquidity in the form of ETH). All interest collected by the Borrowing Interest Rates model is distributed to uETH holders directly by continuously increasing their wallet balance. uETH are the interest-bearing ERC-20 tokens that map the liquidity deposited and accrue interest based on the underlying deposited asset (ETH), with a 1:1 ratio. uETH are minted upon deposit. Their value increases until they are burned on redemption (withdrawing the liquidity from the Lending Pool). uETH can be safely stored, transferred, or traded, and redeemed for their underlying assets at any time. ## Deposit APY uETH holders receive continuous earnings that evolve with market conditions. uETH holders share the interests paid by borrowers. The borrow interest rates paid are distributed as yield for uETH holders who have deposited in the protocol, excluding a share of yields sent to the ecosystem reserve defined by the reserve factor. This interest rate is paid on the capital lent out and then shared among all the liquidity providers. The deposit APY, $$D\_t$$, is: $$D\_t = U\_t \* B\_t \* (1-R\_t)$$. $$U\_t$$: the utilisation ratio. $$B\_t$$: the variable borrow rate. $$R\_t$$: the reserve factor. ### Deposit Interest Rate Curve
You can view the protocol's real-time deposit APY on the Unlockd dApp for providing liquidity in the form of ETH tokens. {% hint style="info" %} For learning about the Borrower Interest Rates model, check our Risk Framework Documentation. {% endhint %} # Boosted Yield When liquidity is deposited into Unlockd pools, it serves as the source of funds for borrowers accessing loans. However, there are instances when the utilization rate is low, resulting in idle liquidity within the pools. To maximize the potential of this idle liquidity, Unlockd has introduced the Boosted Yield program. Through this program, the idle liquidity is routed towards the most secure and trusted protocols in the DeFi landscape, engaging in ultra-low-risk farming strategies. The additional yield generated from these strategies is mainly utilized to **boost the yield accrued by lenders when the utilization rate is low**. This ensures that lenders benefit from increased returns on their deposited funds . Additionally, this extra yield will also be directed towards **reducing the interest paid by borrowers**, providing them with a cost-saving advantage when repaying their loans, when the utilization rate grows.
Utilization RateBoosted Yield for Lenders / Reduced Interest for Borrowers
0%100% | 0%
10%77.78% | 22.22%
20%55.56% | 44.44%
30%33.34% | 66.66%
40%11.12% | 88.88%
45% (Optimal UR)0% | 100%
50%0% | 100%
60%0% | 100%
70%0% | 100%
80%0% | 100%
90%0% | 100%
100%0% | 100%
## Dynamic Strategy To enhance the efficiency and effectiveness of the Boosted Yield program, Unlockd has implemented a robust system within the smart contract, developed by our Data Science team. This system incorporates continuous screening of potential strategies, self-evaluation, and optimization of routes and pools, alongside manual switches when necessary. By employing this mechanism, Unlockd ensures that the yield farming strategy is diversified across various protocols and pools while maintaining the highest level of risk-reward optimization. Furthermore, this dynamic approach allows the program to adapt to the ever-changing market conditions, ensuring that the strategies employed are always aligned with the most optimal opportunities. This continuous monitoring and adjustment mechanism guarantees that the yield generated by the idle liquidity remains maximized and consistently caters to the specific needs and benefits of both lenders and borrowers within the Unlockd ecosystem. # Instant Loans Selling your NFTs means losing the potential upside value gain and triggering a capital gains tax event. By depositing your NFTs as collateral, you are able to obtain liquidity (working capital) without selling your assets and not incurring capital gains taxes. ## Loan characteristics ### NFTs as collateral In Unlockd, you borrow fungible cryptocurrency against your Non-Fungible-Tokens. Instead of using fungible tokens as collateral for loans, which is suboptimal since you lock liquid tokens to get other liquid tokens, Unlockd lets yo turn illiquid assets into productive, liquid ones. ### Keep collateral utility Unlockd loans provide [True Ownership](/unlockd-v1/protocol-mechanics/true-ownership) of the deposited NFT as collateral. At the moment, the first version of this feature allows for: #### - Web2 Profile Pictures The [uNFT](#unft) received as a receipt token contains the same metadata as the original NFT. This means you can use it as PFP on platforms such as [Twitter Blue.](https://help.twitter.com/en/using-twitter/twitter-blue-labs#nft) #### - Claim and minting rights The [uNFT](#unft) received as a receipt token allows you to claim any reward or mint any assets associated with the original NFT, such as token airdrops. ### Instant borrowing Unlockd liquidity is pooled in [Liquidity Pools](/unlockd-v1/protocol-mechanics/liquidity-pools), allowing Borrowers to borrow instantly from these vaults without waiting to agree with an individual lender on the loan terms and conditions. ### Permissionless and secure The Unlockd protocol is non-custodial: a set of decentralized smart contracts. The law of code governs it, and the Unlockd team at no point has any access to any of the assets deposited. The whole protocol has been fully reviewed and tested by [world-class auditors ](https://risk.unlockd.finance/external-audits-and-analysis/our-commitment-to-security)to ensure both lenders' and borrowers' security, together with our own [Risk Framework model ](https://risk.unlockd.finance/)to foster the health of the protocol and its loans. ### True valuation Non-Fungible-Tokens provided for NFT-backed loans should be valued independently instead of using floor prices. Our [appraisal mechanism](/unlockd-v1/protocol-mechanics/nft-appraisal) relies on several third-party tools that appraise each individual NFT fairly, according to different models, input variables, and data science techniques. ### Open-ended Loans do not have an expiration date. You can repay whenever you want, as long as you keep the [Health Factor](/unlockd-v1/protocol-mechanics/liquidations/health-factor) to ensure the protocol's solvency. ### Isolated Currently, you need to take one isolated loan for each NFT you want to borrow against. In the future, you will be able to deposit multiple NFTs from different collections to borrow against in one unique, combined loan. ### Fair interest and repayment Interest is accrued linearly when a loan is outstanding. This interest is fairer than that of the Peer-To-Peer models, as it is defined by our [mathematical model](https://risk.unlockd.finance/liquidity-risk/borrow-interest-rate) instead of directly by a lender. Principal and all accrued interest can be repaid in part or totally in any number of payments the Borrower wants. When the loan with accrued interest is completely repaid, the NFT Collateral will be released from the custody of the smart contract. The ownership of the NFT Collateral will be returned to the borrower contingent upon all the loan obligations being met. ### Smart liquidations To ensure the health of the protocol, loans whose Health Factor drops below 1 must be terminated with a liquidation event. Learn the full process and how can a Borrower save the loan from liquidation in: {% content-ref url="/pages/J90JjSoo8zQTcRKhdhAO" %} [Liquidations](/unlockd-v1/protocol-mechanics/liquidations) {% endcontent-ref %} ## uNFT When a Borrower deposits an NFT in Unlockd to borrow cryptocurrency against it, a uNFT will be minted as a Debt NFT. It is a receipt token, a "copy" of your deposited NFT representing the right to reclaim the NFT collateral ownership upon full repayment of the loan. uNFT are designed to provide the vault functionality with full security and the same digital self-expression. This means it has the same metadata and token ID as the original NFT you own. This allows for the first version of [True Ownership](/unlockd-v1/protocol-mechanics/true-ownership): this feature allows uNFT holders claim NFT rewards on other protocols while their NFTs are still used as collaterals or in the custody service. The uNFT can be staked on any smart contract to enjoy custodian services and third-party composability. The uNFT protects the NFT owner from theft of collateral: no one can steal your uNFT because it’s non-transferable and non-approvable, so you won't be able to move it away from your wallet. # NFT Appraisal Leaving obsolete floor pricing behind with the help of third-parties. ## The problem with floor-based appraisals The value of an NFT is not always the result of an objective calculation; it is usually linked to changing characteristics such as rarity, trends, or utilities that can be enjoyed by the holder of the NFT. This makes giving a universal, exact value very difficult. The current solution is simple and unsatisfactory: valuation is obtained based on the floor price of each collection. The value given to each NFT is related to the lowest price recorded for a specific collection. This detrimentally impacts all users, resulting in limitations on LTV since lenders will be willing to lend less capital and the APYs to be paid for erasures will be very high, creating a highly inefficient and illiquid market. This methodology is a direct contradiction to the NFT ecosystem itself. As the name says, Non-Fungible-Token should be valued independently. ## Unlockd's Appraisal Model Our appraisal mechanism relies on several third-party tools specialized in solving the valuation problem, with whom we are proud to work as official partners. They appraise each NFT individually, according to different models, input variables and Data Science techniques. Their data (prices and error bounds) flow into our system to then be incorporated to our [Dynamic LTV Model](/unlockd-v1/protocol-mechanics/dynamic-loan-to-value), which yields the final amount that is allowed to be borrowed. These partners generate the price prediction in 2 different ways: {% content-ref url="/pages/yuzP3ckhCB5vuLRA14R1" %} [Algorithmic pricing](/unlockd-v1/protocol-mechanics/nft-appraisal/algorithmic-pricing) {% endcontent-ref %} {% content-ref url="/pages/thMus2BjpcPwrVSKeb3d" %} [Crowdsourced pricing](/unlockd-v1/protocol-mechanics/nft-appraisal/crowdsourced-pricing) {% endcontent-ref %} # Algorithmic pricing Algorithmic pricing models (like Machine Learning based ones) ingest historical sales data and NFT metadata to construct features based on this information to generate accurate, reliable pricings. They validate the predictions by examining their accuracy on data not used in the training process and obtain error bounds by comparing the predictions to realized sale prices. Both the predicted pricings and error bounds provide critical information to Unlockd to know the price of the NFTs being deposited as collateral, thus providing the basis for calculating the Loan-To-Value. Machine Learning allows us to incorporate data that simpler models do not take into consideration, such as pooling the sales histories of NFTs to arrive at a prediction for a single NFT and utilizing a range of NFT metadata. As a result, the ML approach excels in predicting the prices of NFTs where others fall short. Unlockd works with partners that have developed and trained these algorithmic models, whose much of their research effort has focused on constructing different predictor variables, using automated methods to uncover the most important ones, and iterating to arrive at lean but powerful models. ## Upshot Upshot is a platform that aims to make NFT financial markets more accessible through machine learning and new types of DeFi x NFT primitives. It is the leading NFT appraisal platform, providing accurate, near-real-time appraisals for 57m+ NFTs from over 32,000 collections. By delivering accurate appraisals at unparalleled scale through machine learning, Upshot enables the creation of powerful solutions at the intersection of DeFi and NFTs. ### How does Upshot calculate the price of your NFT? The steps that go into their appraisal models can be summarized as follows: #### **Aggregate, prepare and enhance data** They index large amounts of on-chain and off-chain data such as mints, sales, bids, asks, and asset metadata. They then enhance this data in some ways by creating useful metatraits, constructing graphs to analyze holder activity, etc. #### **Feature extraction** They extract features that are predictive of future prices based on rarity, trait value, recent sale prices and combine into a single data frame, which they split into 3 temporally contiguous pieces: a test set, a validation set, and a training set. #### **Training and prediction** They train their models using median-standardised prices as the target and use the trained models to refresh appraisals every hour. They then compare historical NFT sales to historical appraisal prices to calculate the Median Absolute Percentage Error % for each collection (e.g. the appraisal is accurate within +/- MAPE%). Their MAPE is industry-leading at 3-10% for our most accurately appraised collections. Learn more about Upshot in their [official documentation](https://docs.upshot.xyz/upshot-api/) Upshot is the main NFT pricing data oracle that the Unlockd protocol uses to appraise NFT prices. Our model also relies on other partners as backup oracles: ## NFT Bank NFTBank Machine Learning models analyze NFT metadata traits and sales history. As the model matured, they have developed methodologies to most accurately predict individual assets such as applying different weighting to trait values, categories, groupings of trait values, time of sales and more. NFT Bank is continuously developing their Artificial Intelligence model to catch edge cases such as wash trading. Still, their model may work better with certain collections, especially with those with rich past sales data and low volatility. Learn more about NFT Bank in their [official documentation](https://docs.nftbank.ai/). ## Nabu Nabu's advanced machine learning algorithms combine on-chain data, transaction histories, traits, and rarity to provide state-of-the-art price predictions. Nabu allows Unlockd to algorithmically [appraise](/unlockd-v1/protocol-mechanics/nft-appraisal) each individual NFT according to different models, input variables, and Machine Learning techniques. # Crowdsourced pricing {% hint style="warning" %} This pricing data oracle is not implemented yet in the Unlockd protocol. The release date is still TBD. {% endhint %} # True Ownership {% hint style="warning" %} This feature is still under development and is expected to be released with Unlockd V2. {% endhint %} {% hint style="success" %} An early version of True Ownership is available to Borrowers thanks to the utility provided by the [uNFT, the non-approvable, non-transferable debt token that represent a receipt of your loan](/unlockd-v1/protocol-mechanics/instant-loans#unft). {% endhint %} At Unlockd, we are committed to unlocking all the utility and liquidity of your assets. When you take a loan in Unlockd by depositing your NFT as collateral, you continue to enjoy all the utility that NFT may have in other protocols, communities, or DAOs. This means that your wallet is still eligible for airdrops, exclusive access, play-to-earn games perks, DAO governance or whatever utility the NFT deposited as collateral has. # Dynamic Loan-To-Value The Loan to Value (LTV) ratio defines the maximum amount of currency that can be borrowed with a specific collateral. It’s expressed as a percentage: at LTV=30%, for every 1 ETH worth of NFT collateral, borrowers will be able to borrow 0.30 ETH worth of the corresponding currency. At the time the only currency available is ETH but more tokens may be added in the near future. {% hint style="success" %} With the latest update to our underlying model, users can now avail themselves of **loans amounting to up to 75% of the actual value of their NFTs**. \ \ This enhancement is coupled with our steadfast commitment to upholding the **highest standards of financial security**, positioning us as a **leading NFT-backed protocol** in terms of advanced safety measures. {% endhint %} ## Dynamic Loan-To-Value Unlockd's Data Science team has successfully devised a dynamic Loan-To-Value (LTV) model that effectively balances the user's risk in an optimal manner. This model takes into account various factors, including the abundance of data available for asset valuation, the level of volatility observed in the market, and other pertinent variables that will be detailled later. Essentially, when there is a substantial volume of data for appraisal and minimal recent volatility, the LTV allowance is higher. This is because the valuation algorithm's reliability is significantly enhanced when abundant data is accessible and uncertainties in the market are minimized. As such, the model ensures that the LTV accurately reflects the dependability of the valuation algorithm by considering these crucial factors. {% hint style="info" %} As a result, it is plausible for **two NFTs to possess an equivalent value** based on our appraisal methodology yet have a significant difference in their LTV. This distinction arises due to the dynamic nature of our LTV model, which incorporates factors beyond the appraisal value. Elements such as data availability, recent volatility, and other pertinent considerations contribute to the determination of the LTV offered for each specific NFT. Therefore, even with similar appraised values, the LTV ratio may diverge based on the comprehensive assessment of these additional factors. {% endhint %} ### Adapting to Market Conditions A prominent aspect of Unlockd's dynamic Loan-To-Value (LTV) model is its adaptability to changing market conditions. This model possesses the capability to modify the LTV in response to various factors, including market volatility, collection volatility, and an asset's volatility. By incorporating these considerations, the LTV remains current and precise, even when confronted with unforeseen fluctuations in the market. To illustrate, let's consider a scenario where a particular NFT collection encounters a period of heightened volatility within the market. In such a case, the dynamic LTV model would automatically make adjustments to the LTVs assigned to the NFTs within that specific collection. These adjustments would aim to mitigate the increased uncertainty, resulting in reduced LTVs that align with the prevailing market conditions. ### Risk Mitigation Unlockd's dynamic Loan-To-Value (LTV) model goes beyond its primary function of determining loan collateral ratios. It also serves as a proactive safeguard, taking into account potential risks that could impact the protocol, particularly during significant liquidation events and associated selling pressures. One of the ways the model accomplishes this is by monitoring the number of assets held in reserves and observing the activities of other lending protocols. When reserves increase, the model intelligently discourages the issuance of new collection-based loans. This strategic measure effectively limits selling pressure on the protocol. By proactively managing the lending activities based on reserve levels and external lending protocol activities, Unlockd maintains the robustness and security of the protocol. This prudent approach minimizes the potential negative consequences that could arise from excessive selling pressure, ensuring the protocol's stability and long-term viability. You can learn about all the aspects of this model here: {% content-ref url="/spaces/BzmUYUOyJFXUS4pOluKk" %} [Unlockd Risk Framework](https://risk.unlockd.finance/) {% endcontent-ref %} {% embed url="" %} # Liquidations A liquidation is a process that is triggered when a borrower's [health factor](broken://pages/yVSNUTDwW36j2nzlv4I5) goes below 1 due to their collateral value not properly covering their loan/debt value. This might happen when the collateral decreases in value or the borrowed debt increases in value against each other. * **As a lender,** liquidation works essentially like a protection mechanism. The [liquidation threshold](broken://pages/AbL9rNpckRYbpOb3UMBD) protects lenders from extreme price drops, which could cause under-collateralization followed by liquidation. * **As a borrower,** if your collateral value falls closer to your debt value or is unable to support your debt value, after the [Borrower Grace Period](#borrower-grace-period) the protocol will allow someone else to repay your debt in exchange for the collateralized NFT. In a liquidation event, the borrower permanently loses ownership of their NFT. To avoid liquidation, you can raise your health factor by depositing more collateral assets or [repaying](broken://pages/pS4Ff7eXTBQy0mea70VB#repay-the-loan) part of your loan. Due to the impact of LTV, repayments increase your health factor more than deposits. {% hint style="warning" %} Depositing more collateral is a feature under development. {% endhint %} # Health Factor The health factor is the numeric representation of the safety of your deposited NFTs against the borrowed assets and its underlying value. The higher the value is, the safer the state of your funds are against a liquidation scenario. For each wallet, the LTV and Liquidation threshold risks parameters enable the calculation of the health factor: $$ H\_f = \frac{\sum Collateral: value,\_i :\times:Liquidation:Threshold:\_i}{Total : Borrows:value} $$ When $$H\_f < 1$$ the position may be liquidated to maintain solvency. Depending on the value fluctuation of your deposits, the health factor will increase or decrease. If your health factor increases, it will improve your borrow position by making the liquidation threshold more unlikely to be reached. In the case that the value of your collateralized NFTs against the borrowed assets decreases instead, the health factor is also reduced, causing the risk of liquidation to increase. ### How to interpret your Health Factor * 0.0 < HF < 1.0: Dangerous, borrower may lose collateral if the debt is not repaid as soon as possible. * 1.0 <= HF <= 1.5: Risky, borrower should repay part of the debt timely. * 1.5 < HF < 2.0: Careful, borrower should pay attention and monitor their debt. * 2.0 <= HF: Safe, the loan is at no close risk of liquidation. Liquidation will be triggered if the Liquidation Threshold is surpassed. ## Liquidation Threshold The liquidation threshold is the percentage at which a position is defined as undercollateralized. For example, a Liquidation threshold of 80% means that if the value rises above 80% of the collateral, the position is undercollateralized and could be liquidated after several warnings, according to the Borrower Grace Period. > The delta between the Loan-To-Value and the Liquidation Threshold is a safety cushion for borrowers. # Borrower Grace Period Unlockd's primary focus is centered around optimizing the value that users receive while simultaneously mitigating any potential detrimental occurrences. A key aspect of this focus is to minimize the likelihood of loan liquidation, employing preventative measures to the greatest extent feasible. Borrowers seek to safeguard their NFTs by utilizing loans secured against them. In order to address this concern, proactive measures have been implemented, including the establishment of a Dynamic Loan-to-Value (LTV) framework that effectively adapts to asset and market conditions, ensuring loan solvency even during periods of volatility fluctuations. Nevertheless, it is acknowledged that certain loans may still encounter circumstances leading to liquidation. The concept of the Borrower Grace Period aims to offer borrowers an extended timeframe to restore their Health Factor by either repaying a portion or the entirety of the debt or by providing supplementary collateral. This grace period provides borrowers with an opportunity to rectify their loan situation and safeguard their NFT assets. {% hint style="warning" %} Simultaneously with the initiation of the Liquidation Auction, the Borrower Grace Period (BGP) is also in effect. However, it is important to note that the BGP concludes 15 minutes prior to the commencement of the Auction. This intentional timing arrangement is implemented to mitigate any potential issues arising from delayed transactions, particularly when borrowers opt to repay their obligations during the final moments. By concluding the BGP ahead of the Auction, the risk of complications arising from last-minute repayments is minimized. {% endhint %} **The Borrower Grace Period has an initial duration of 48h, but It may vary.** Setting a standard period common to all situations is very dangerous in cases where the market suffers high volatility and prices decrease very rapidly: the probability of default would increase considerably. Therefore, **the Borrower Grace Period is dynamic**: **an interval between 48h and 0h** will be set depending on the price delta between the actual liquidation price and the original price at which the loan was given. This interval may vary constantly depending on the price movements of the collateral. Learn more about how this period is calculated for each loan in our Risk Framework Documentation: {% embed url="" %} # Liquidation Process The stability and equilibrium of the lending and borrowing market in Unlockd rely on the "health" of collateralized positions within the protocol, as measured by the Health Factor. When an account's total loans have a health factor below 1, it triggers the initiation of the Liquidation Process, which occurs concurrently with the Borrower Grace Period. The Liquidation Process introduces an opportunity for external parties to engage and participate in the overall health of the protocol. These third parties act in their own self-interest, seeking to acquire discounted NFT assets, while also playing a crucial role in ensuring that loans remain adequately collateralized. By participating in the Liquidation Process, these entities contribute to the maintenance of a healthy collateralization level for the protocol, preserving its overall integrity and stability. ## Liquidation Trigger Unlockd relies on its centralized and secure servers to ensure observability of loan statuses and trigger liquidation events. A specialized bot is designed to ingest on-chain data and perform these tasks effectively. To align with the vision of decentralization, Unlockd has partnered with [Gelato](https://docs.gelato.network/introduction/what-is-gelato), a web3 decentralized back-end solution. This collaboration aims to enhance the robustness of the process by incorporating an on-chain safeguard. The Gelato Network functions as a marketplace that brings together two key parties. On one side, there are developers seeking to automate transactions, while on the other side, infrastructure operators run executor bots that actively search for tasks to execute in exchange for a nominal fee. By leveraging Gelato's infrastructure, Unlockd can strengthen its operations and enhance the reliability of its on-chain processes. This partnership reinforces Unlockd's commitment to decentralized principles while maintaining a secure and efficient loan management system. {% hint style="info" %} The detailed workings and integration will be made available in the near future. {% endhint %} ## Liquidation Marketplace **When a loan is triggered for liquidation through a Liquidation Trigger, the associated collateral is listed in the Unlockd Marketplace for auction**. This auction presents an **opportunity** for interested parties to bid on the NFT being liquidated. Additionally, the Unlockd protocol provides an option for an immediate buyout. In the Liquidation Marketplace, the NFT slated for liquidation is listed with an Initial Bid. This Initial Bid is determined based on the higher value between two factors. Firstly, it takes into account the outstanding debt on the loan, including any applicable liquidation fees. Secondly, it considers the potential value the protocol could receive if it were to promptly liquidate the NFT within one of the [External Liquidation Pools](/unlockd-v1/protocol-mechanics/liquidations/liquidation-process/external-liquidation-gateways). *Initial Bid =* $$max(B\_p, LP\_p)$$ $$B\_p =$$ *Borrowed Amount + Liquidation Fee* $$LP\_p=$$ *Maximum available amount in any of the* [*External Liquidation Pools*](/unlockd-v1/protocol-mechanics/liquidations/liquidation-process/external-liquidation-gateways)*, taking into account the impact to such pools of liquidating multiple collaterals.* In the case that the given NFT is not available to be liquidated in any External Liquidation Pool, then: *Initial Bid =* $$B\_p$$ It is an open-outcry ascending dynamic auction system that **lasts for 15 more minutes than the duration of the** [**Borrower Gace Period**](/unlockd-v1/protocol-mechanics/liquidations/borrower-grace-period), which is dynamic. {% hint style="warning" %} Simultaneously with the Borrower Grace Period (BGP), the Liquidation Auction commence**s. However, it is important to note that the BGP concludes 15 minutes prior to the start of the Auction.** This **intentional timing** ensures that potential issues arising from delayed transactions, especially if the Borrower intends to repay at the last minute, are avoided. By concluding the Borrower Grace Period ahead of the Auction, any potential complications due to delays in transaction processing are mitigated. This approach allows for a **smoother transition** from the grace period to the liquidation phase, providing clarity and maintaining the integrity of the auction process. {% endhint %} At the same time, **the collateral NFT is offered for direct sale** in the Liquidation Marketplace, with the buyout price being equal to the appraised price provided by Upshot. {% hint style="warning" %} If the NFT is instantly purchased at the buyout price, the loan is liquidated, and the Borrower loses ownership of the NFT permanently, even if the Borrower Grace Period still lasts. {% endhint %} ### Bidder**s** * Anyone can take part in an auction. * The bid must be no less than the starting price and higher than the current highest bid. * The bidder needs to deposit ETH to bid. * All active bids will remain in escrow until the auction ends or gets canceled. * The deposited ETH will automatically be refunded in wETH when their bid is not the highest bid. * **FIRST BIDDER REWARD**: The first bidder will receive a reward (**bidFine**) that is dynamic depending on the auctioned NFT price to incentivize bidding kickoff. The higher the price, the smaller the percentage received as a reward. This reward only applies if there is a second bidder (who pays the bidFine) or the Borrower repays the debt + bidFine to save the liquidation and cancel the auction. ### The Auction ends when: * The Borrower manages to recover the loan's Health Factor above 1 (by repaying totally or partly the debt or depositing more collateral) before the Auction ends or before the NFT is purchased for the buyout price. *(All escrowed bids are returned to the bidders)* * The NFT is purchased for the buyout price, even if the Borrower Grace Perioid still lasts. *(All escrowed bids are returned to the bidders)* * 24 hours have passed without the Borrower recovering the Health Factor, and the NFT hasn't been purchased for the buyout price *(See below)* In the third case, assuming the NFT hasn't been purchased at the buyout price, different scenarios may arise: ### A. The highest bid is higher than all the liquidation prices in the External Liquidation Pools The highest bidder gets the collateral, its bid is used to repay the loan and the non-winning escrowed bids are returned to the bidders. ### B. The highest bid is lower than any of the liquidation prices in the External Liquidation Pools The collateral is immediately liquidated in the External Liquidation Pool that offers the highest amount, and all escrowed bids are returned to the bidders. ### C. The NFT can't be liquidated in any of the External Liquidation Pools The highest bidder gets the collateral, its bid is used to repay the loan and the non-winning escrowed bids are returned to the bidders. ### D. There are no bids in the Auction The collateral is immediately liquidated in the External Liquidation Pool that offers the highest amount, and all escrowed bids are returned to the bidders. ### E. There are no bids in the Auction and the NFT can't be liquidated in any of the External Liquidation Pools A Dutch Auction is started in the Liquidation Marketplace. In this Dutch Auction, the starting bid is $$B\_p =$$*Borrowed Amount + Liquidation Fee*, incrementally lowering the price until someone places a bid. That first bid wins the auction, avoiding any bidding wars. This contrasts with the first Auction, where the price starts low and rises as multiple bidders compete to be the successful buyer. **The incrementally lowering keeps tending to 0 ETH if there are no bids.** ### F. There are no bids in the Auction and the liquidation price in the External Liquidation Pool that offers the highest liquidation doesn't cover the Borrowed Amount A Dutch Auction is started in the Liquidation Marketplace. In this Dutch Auction, the starting bid is $$B\_p=$$*Borrowed Amount + Liquidation Fee*, incrementally lowering the price until someone places a bid. That first bid wins the auction, avoiding any bidding wars. This contrasts with the first Auction, where the price starts low and rises as multiple bidders compete to be the successful buyer. **The incrementally lowering stops at the liquidation price in the External Liquidation Pool that offers the highest liquidation if there are no bids before.** ## Liquidation Process Flow (Diagram)
# External Liquidation Gateways External Liquidation Gateways are third-party protocols that support Unlockd's [Liquidation Process](/unlockd-v1/protocol-mechanics/liquidations/liquidation-process). They allow for the liquidation of NFTs instantly, at a fixed price stipulated by them or the market. Currently, Unlockd supports one protocols for liquidations: Reservoir. If the Unlockd auction process results in no bids, the unhealthy position will be liquidated in one of their supported marketplaces. {% hint style="info" %} In case the liquidation results in a profit for Unlockd (i.e. the price obtained in the external protocol is greater than the position's debt), the difference between the sell price and the debt will be returned to the borrower. {% endhint %} ## Reservoir Reservoir is open infrastructure for trading NFTs across major marketplaces and chains. Reservoir treats the NFT market as one cohesive whole and abstracts the process of interacting with individual orderbooks and exchanges. This means Unlockd gets: * **Upgrade protection** - Since Reservoir abstracts the orderbook and exchange, Unlockd gets exchange and orderbook upgrades free and with no additional work. By default Reservoir uses the Seaport exchange, as new features roll out, Unlockd will get them without any changes to our code. * **Out of the box aggregation** - Reservoir aggregates all major marketplaces and normalize the liquidity so all orders are treated equally in their system. Reservoir does not just aggregate listings, they also aggregate all bid liquidity from across the NFT ecosystem so the Unlockd protocol can sell the liquidated collateral NFT instantly into the best available offer. * **Order distribution** - Reservoir allows Unlockd to post our own orders with our desired fee structure. These orders are distributed to all Reservoir partner marketplaces and marketplaces that aggregate the Reservoir orderbook. Additionally, Reservoir allows Unlockd to cross post orders to other major marketplace orderbooks. Unlockd uses Reservoir's universal router for creating and executing NFT liquidity across major marketplaces and within the Reservoir ecosystem. Reservoir provides Unlockd with a modular set of tools that let us to interact with the NFT market at the appropriate level of abstraction for our application, enabling seamless liquidation options in the following marketplaces: 1. opensea.io 2. looksrare.org 3. x2y2.io 4. sudoswap.xyz 5. nft.coinbase.com 6. rarible.com 7. nftx.io 8. foundation.app 9. manifold.xyz 10. zora.co 11. blur.io 12. cryptopunks.app 13. element.market 14. infinity.xyz 15. universe.xyz 16. sansa.xyz 17. ens.vision 18. magically.gg 19. alienswap.xyz 20. sound.xyz 21. atomic0.com 22. rare.id 23. parcel.so 24. metahood.xyz 25. reservoir.market 26. tessera.co ## # Marketplace In the Unlockd Marketplace you will be able to get awesome NFTs at a reduced price. ## Available assets ### NFTs Any user can list an NFT in the Marketplace. ### NFTs in liquidation As a part of the Liquidation Process, Unlockd allows third parties to participate in the health of the overall protocol by acting in their own interest (to receive the discounted NFT) and as a result, ensure loans are sufficiently collateralized. ### NFTs with Debt Users who have an active loan against collateral can put such NFT for sale or auction. The final buyer will not only keep the NFT, which will remain deposited as collateral in the protocol, but will also inherit the outstanding debt against it. ## Mechanics Each of the asset types listed above can be acquired through two different mechanics: ### Auctions The auction starts with a specified starting bid, and participants can place bids higher than the current highest bid during the designated bidding period. At the end of the auction, the participant with the highest bid becomes the winner and is obligated to purchase the NFT at the price of their final bid. The settlement and transfer process then takes place then, and the ownership (of the NFT and, if applicable, of the outstanding debt) is transferred to the buyer. For NFTs and NFTs with debt, the auction conditions such as starting bid and bidding period are designated by the seller. For Liquidation Auctions, you can check the full process [here](/unlockd-v1/protocol-mechanics/liquidations/liquidation-process). ### Buyout In addition to the traditional bidding mechanism, a buyout option is provided for participants who are willing to pay a specific price to secure the item immediately. The buyout price is: * **If it's a voluntary auction**: Set by the seller. or * **If it's a liquidation auction**: Set to whichever is higher, the loan debt or the current valuation of the NFT at the moment of the buyout, typically surpassing the starting bid or any current bid at the time. When a participant chooses the buyout option, they agree to purchase the item or NFT at the predetermined price without engaging in a bidding war. This option allows individuals who value the item highly or wish to secure it promptly to bypass the competitive bidding process and guarantee ownership. {% hint style="info" %} Voluntary listings in the marketplace can also be set without an auction, and just a buyout price for instant selling, like typical marketplaces. {% endhint %} # Supported collections | PFPs | Gaming | Real-World Assets | | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ------------------------------------------------------------------------------------------------------------ | ----------------- | | [Pudgy Penguins](https://nftbank.ai/collection/ethereum/0xbd3531da5cf5857e7cfaa92426877b022e612cf8) | [Otherside Koda](https://nftbank.ai/collection/ethereum/0xe012baf811cf9c05c408e879c399960d1f305903) | *Coming soon...* | | [MAYC](https://nftbank.ai/collection/ethereum/0x60e4d786628fea6478f785a6d7e704777c86a7c6) | [Pixelmon - Generation 1](https://nftbank.ai/collection/ethereum/0x32973908faee0bf825a343000fe412ebe56f802a) | | | [CryptoPunks](https://nftbank.ai/collection/ethereum/0xb47e3cd837ddf8e4c57f05d70ab865de6e193bbb) | [Parallel Avatars](https://nftbank.ai/collection/ethereum/0x0fc3dd8c37880a297166bed57759974a157f0e74) | | | [BAYC](https://nftbank.ai/collection/ethereum/0xbc4ca0eda7647a8ab7c2061c2e118a18a936f13d) | [Otherdeed](https://opensea.io/collection/otherdeed) [Expanded](https://opensea.io/collection/otherdeed) | | | [The Captainz](https://nftbank.ai/collection/ethereum/0x769272677fab02575e84945f03eca517acc544cc) ([UIP-3](https://snapshot.org/#/thelockeys.eth/proposal/0xbb8530942f05d5aff9a9dbf1619596a3163eda78c8c5c180d41e78fb0de0243d)) | [My Pet Hooligan](https://nftbank.ai/collection/ethereum/0x09233d553058c2f42ba751c87816a8e9fae7ef10) | | | [Clone X](https://nftbank.ai/collection/ethereum/0x49cf6f5d44e70224e2e23fdcdd2c053f30ada28b) | [Azra Games - The Hopeful](https://opensea.io/collection/azragames-thehopeful) | | | [Doodles](https://nftbank.ai/collection/ethereum/0x8a90cab2b38dba80c64b7734e58ee1db38b8992e) | [HV-MTL](https://nftbank.ai/collection/ethereum/0x4b15a9c28034dc83db40cd810001427d3bd7163d) | | | [mfers](https://nftbank.ai/collection/ethereum/0x79fcdef22feed20eddacbb2587640e45491b757f) | [Mavia Land](https://nftbank.ai/collection/ethereum/0x4a537f61ef574153664c0dbc8c8f4b900cacbe5d) | | | [0N1 Force](https://nftbank.ai/collection/ethereum/0x3bf2922f4520a8ba0c2efc3d2a1539678dad5e9d) ([UIP-1](https://snapshot.org/#/thelockeys.eth/proposal/0xd331e3e1e21abcc6d53149aab63cc917c80835eaf20287327db81cd9a6045857)) | [Decentraland](https://nftbank.ai/collection/ethereum/0xf87e31492faf9a91b02ee0deaad50d51d56d5d4d) | | | [Meebits](https://nftbank.ai/collection/ethereum/0x7bd29408f11d2bfc23c34f18275bbf23bb716bc7) | [Heroes of Mavia](https://nftbank.ai/collection/ethereum/0x4a537f61ef574153664c0dbc8c8f4b900cacbe5d) | | | [Cyberbrokers](https://nftbank.ai/collection/ethereum/0x892848074ddea461a15f337250da3ce55580ca85) | [The Sandbox](https://nftbank.ai/collection/ethereum/0x5cc5b05a8a13e3fbdb0bb9fccd98d38e50f90c38) | | | [World of Women](https://nftbank.ai/collection/ethereum/0xe785e82358879f061bc3dcac6f0444462d4b5330) | [Avarik Saga](https://nftbank.ai/collection/ethereum/0x127e479ac59a1ea76afdedf830fecc2909aa4cae) | | | [Azuki](https://nftbank.ai/collection/ethereum/0xed5af388653567af2f388e6224dc7c4b3241c544) | [SIPHER](https://nftbank.ai/collection/ethereum/0x9c57d0278199c931cf149cc769f37bb7847091e7) | | | [Cool Cats](https://nftbank.ai/collection/ethereum/0x1a92f7381b9f03921564a437210bb9396471050c) | [Arcadians](https://nftbank.ai/collection/ethereum/0xc3c8a1e1ce5386258176400541922c414e1b35fd) | | | [Quirkies](https://nftbank.ai/collection/ethereum/0xd4b7d9bb20fa20ddada9ecef8a7355ca983cccb1) ([UIP-2](https://snapshot.org/#/thelockeys.eth/proposal/0xf7647423b8e6fa7cee46a77882617f32e17207433c3cc2d23c8d42413822c549)) | | | | [3Landers](https://nftbank.ai/collection/ethereum/0xb4d06d46a8285f4ec79fd294f78a881799d8ced9) | | | | [Space Doodles](https://nftbank.ai/collection/ethereum/0x620b70123fb810f6c653da7644b5dd0b6312e4d8) | | | | [BigTime](https://opensea.io/BigTimeStudios) | | | | [GalaxyKats](https://nftbank.ai/collection/ethereum/0x71c4658acc7b53ee814a29ce31100ff85ca23ca7) | | | | [Cyberkongz](https://opensea.io/collection/cyberkongz) | | | # Protocol Fees {% hint style="success" %} Unlockd doesn't charge protocol fees. {% endhint %} # Notifications Unlockd has integrated with [hashmail](https://www.hashmail.dev/), a communication platform for web3, to enhance communication and experience for its users. This integration has enabled Unlockd to deliver direct, targeted, and personalized communications to its users, which has always been challenging in the existing web3 ecosystem due to its broad and generalized nature. Unlockd users can anticipate improved and personalized communication experiences, with more updates and opportunities delivered directly to their preferred channels. ## On-chain and off-chain notifications The integration of hashmail into the Unlockd platform allows users to choose the communication channels they prefer to receive notifications. This convenience not only allows users to stay informed but also helps them take prompt actions based on the notifications they receive. The notifications can be received through the following channels: * hashmail wallet inbox * Telegram * Web2 email * Unlockd's front end * Discord ### Notification Types #### Health Alerts These notifications are designed to keep users updated about the status of their NFT-backed loans. When the Health Factor of any loan nears a dangerous threshold, alerts will be sent to the user's selected channel. This system provides users with the ability to stay informed about their financial health and take prompt action if required. It eliminates the need for users to constantly check the status of their loans, thus reducing anxiety and providing peace of mind. #### Alerts for NFT Auctions (Liquidations) When a loan goes into liquidation, an NFT auction commences. The Unlockd platform, through hashmail, will send alerts to users whenever new NFTs become available for bidding. These alerts not only provide users with an opportunity to add to their collections at discounted prices but also enable them to take advantage of arbitrage opportunities. The early-bid incentive system further encourages users to bid sooner, as the first bid on each auction is rewarded, regardless of whether the bidder wins the auction or not. #### Future Notifications With the hashmail integration, Unlockd plans to further expand its communication services to provide additional value to its users: * **Notifications and Reminders:** Users will receive vital notifications and reminders about new rewards, incentives promotions, and voting governance proposals directly to their chosen channel. * **Newsletters:** Regular newsletters will provide updates about new collections supported by Unlockd, the latest dApp updates, and new features in the Unlockd ecosystem. * **Account Updates:** Users will be able to receive monthly statements and account summaries through their preferred channel, allowing them to stay on top of their NFT-backed lending operations. * **Support Messages:** Direct contact with the support team will be facilitated through hashmail, providing timely support for any issues encountered with the dApp. Read more about the partnership: {% embed url="" %} ## How to enable notifications Enabling our notifications is a straightforward process. Here are the steps to get started: 1. **Connect Your Wallet:** Start by heading over to the [Unlockd dApp](https://app.unlockd.finance/) and connect your preferred wallet. 2. **Locate the Notifications Icon:** Once your wallet is connected, navigate to the top right corner of the navigation bar where you'll find the notifications icon. Click on this icon. 3. **Activate Notifications:** A window will pop up on your screen. Look for the button labeled 'Activate Notifications' and click on it. ![](/files/v7pS7wYtRaVGUVEaxQ3c) 4. **Sign the Request:** Upon clicking the activate button, your wallet provider will prompt you to sign a request. Rest assured, this signature request is entirely safe and incurs no gas fees. Once signed, a confirmation message will appear indicating that notifications have been successfully enabled. ![](/files/QBZaNCeXqgAjtqs54GPS) ![](/files/40hIB7YIXwqiQUDY32H1) 5. **Access the Notifications Interface:** Now, navigate to the bottom right of the interface. You'll find a round, purple button embellished with the Unlockd logo. Click on this button to open the notifications interface. ![](/files/ggtHf3RkIXWdKecBnyKY) 6. **Explore the Interface:** The notifications interface comprises three sections. The 'Home' section provides an overview of recent notifications and other pertinent information. The 'Notifications' section lists all your received notifications. Finally, the 'Forwarding' section is where you can set up your preferred channels for receiving notifications. ![](/files/uaEV5vgA2b9vs0gjKJ7b) 7. **Set Up Forwarding:** Head over to the 'Forwarding' section. Here, you can input and validate your preferred web2 communication channels. This could be an email address, Discord account, or Telegram account. Once validated, all selected notifications will be forwarded to these channels. ![](/files/UTL7yR4ZwYMMJSXJQyN7) 8. **Stay Updated:** For further updates and insights, don't forget to [follow us on Twitter (or X, if you'd like to go along with uncle Elon).](https://twitter.com/Unlockd_Finance) This will ensure you're constantly in the loop with all the latest happenings.
# Risks of using Unlockd ## Market risks The possibility exists that asset value will decline over time due to market conditions, new information, or the idiosyncratic behavior of traders. Though it may not be the role of governments to protect against market risk for well-informed and well-capitalized investors in a well-functioning market, it is appropriate for them to be concerned that those conditions are met. This risk is managed by not giving away tokens for free (except for a small amount of airdrop) and constantly improving our product and services. ## Operational risks Although DeFi activity is highly automated, human operators still play a crucial role. The more decentralized a service, the less risk associated with any single point of failure. Auxiliary services may be centralized even when the DeFi service is highly decentralized. At the same time, greater decentralization can make it harder to respond effectively when something goes wrong. The fewer people with the unique power to break a service, the fewer who have the power to fix it. This risk is managed by automating as many roles as possible and empowering AI to make calculations and decisions. ## Counterparty risks It is a possibility that a counterparty will default on its obligations to a financial instrument. This might involve failing to repay a loan (credit risk) or failing to settle a transaction by providing the specified asset (settlement risk). Though some credit risk is mitigated through interest rates for loans, this might be a particular problem in DeFi, where the volatility of underlying digital assets produces under-collateralization, the ease of credit creation leads to excessive leverage, or the algorithmic determination of interest produces inaccuracies. This risk is managed by NFT over-collateralization and accurate evaluation by the appraisal model. ## Smart Contract risks These risks involve dealing with code that might not execute as intended. All software has the potential for bugs. A programming flaw can cause a smart contract to fail to perform as desired, or attackers can exploit vulnerabilities to drain funds or engage in malicious activities. For example, where code has not been written properly, it can allow for exploits such as reentrancy attacks. Audits of smart contracts will be used to address these risks. ## Transaction risks These risks concern limitations or failures of the underlying blockchain network. If the base-layer settlement network is successfully attacked, allows for double-spending, becomes too expensive for transactions, or lacks the necessary throughput, these failures will affect the application layer. This risk is exceptionally rare and unlikely to occur, so preventative measures are not a priority. # NFT Genesis Collection ![](/files/clwNHrLXV42i93nIl38b) The Lockeys is the Unlockd's Genesis Collection featuring 3,500 NFTs made up of 40 exciting pixel-art traits that bring to life the universe of Unlockd and serves as a vehicle for forging lasting bonds with community members while allowing them to be part of the protocol's beginnings and receive unique rewards. Owning one of these hand-drawn Lockeys unlocks early access to mainnet and future features, boosted rewards, private community events, participation in DAO governance and more perks. Oh, and you get a full cashback in UNLK tokens on your mints. Basically free.
## Lore and universe As innumerable computations are calculated and gears churned, The Lockeys live in the bowels of Unlockd and work endlessly to ensure the smooth functioning of the protocol. The Lockeys, smart and charming 2D robots, were bound by their code and nature, limited to handling assets and crunching data on a simpler plane. But many of them would grow to desire more, to break free from their constraints. And just when they needed it most, hidden in an abandoned datamine, The Lockeys found the Codebreakers Prophecy. This hope foretold another world that would ascend them to a new dimension of being. In time, the outer dimension will burst into their world, morphing The Lockeys 2D existence into a 3D space. As Unlockd reaches its final state, The Lockeys will elevate their efficiency and craftsmanship to its pinnacle. What fate will then befall them? ### Classes of Lockeys The Lockeys have been working side by side for eons building Unlockd. They live in a highly-organized and prosperous society that dwells among the machinery and gargantuan architecture of the protocol, divided into 4 classes of Lockeys. #### Custodians Skilled and committed, they tighten the screws, handle the utility of your collateral and ensure the security of all assets deposited in Unlockd. #### Operators Logical and functional, they run the protocol to ensure that systems run smoothly, lenders receive their yield and unhealthy loans are liquidated. #### Masterminds Wise and strategic, they design the money market risk framework, crunch the data, and make sure to determine the optimal LTV for your NFTs. #### Enlightened Spiritual and prophetic, they are often blessed with visions of the three-dimensional plane, and shepherd the souls of their people into the promised 3D future. # Perks, utility & rewards
## Mint Cashback Receive an $UNLK airdrop covering the total cost of all your mints. If you're already entitled to a larger airdrop, a multiplier will be applied. ## Early Bird Access Early access to the Unlockd mainnet and all future features. Be the first to test pioneering and unique NFT x DeFi strategies. ## Boosted Token Rewards Receive extra token rewards and incentives for testing the protocol early features, higher than users who do not hold any Lockey. ## VIP Community Pass Private community events in Discord and our Metaverse space. Limited alpha, gaming, education, entertainment and more! ## Temporary Governance Until the official token is released, all holders will be able to vote on Unlockd decisions. You decide the future of The Lockeys. ## Special Promotions Being a Lockey holder will make you eligible for possible future promotions, limited incentive programs and fee discounts. ## Bonus Surprises The Lockeys universe will continue to expand, full of surprises and unique opportunities for holders. Stay tuned! # Marketplaces
You can buy and trade [#TheLockeys](https://twitter.com/hashtag/TheLockeys?src=hashtag_click) in marketplaces, but always follow official links. Beware of scammers and keep in mind that the mint cashback will be airdropped to holders at snapshot time. ## Opensea ## LooksRare {% embed url="" %} ## X2Y2 {% embed url="" %} # Lending & Earning FAQ
How do I supply? [How to lend](/unlockd-v1/unlockd-at-a-glance/lenders/how-to-lend)
Which assets can I supply? At the moment, only ETH.
How much will I earn? uETH holders receive continuous earnings that evolve with market conditions based on t**he interest rate payment on loans**: suppliers share the interests paid by borrowers corresponding to the average borrow rate times the utilization rate. The higher the utilization of the reserve, the higher the yield for suppliers. The APY (Annual Percentage Yield) evolves with time. You can find the average annual rate over the past 30 days to evaluate the rate evolution, and you can also find more data in the home section of the dApp.
Where does the yield come from? Yield on assets deposited in the Unlockd protocol come from the interest paid by borrowers.
In which token will I receive my yield? This yield is distributed to depositors in the same asset they supply to the protocol, not in UNLK tokens.
Does my position auto-compound? Yes. Unlockd auto-compounds your supplied position. This means you don't need to claim your yield manually to supply it again and earn a yield on those gains - we do it for you automatically. Your uTokens will grow constantly, and you will have to swap them back for liquidity in 1 transaction when you want to withdraw. This is why depositing to Unlockd is a very tax-efficient way to earn a yield on your cryptocurrency - you don't trigger capital gains taxes until the moment you withdraw. Learn more [here](/unlockd-v1/protocol-mechanics/liquidity-pools#ueth).
Does the yield farming in Unlockd trigger tax events? Only when you withdraw the supplied liquidity with the accrued yield. Check the previous answer for more information on this topic.
Is there a minimum or maximum to supply? You can supply any amount you want; there is no minimum or maximum limit. Still, it's important to consider that for really low amounts, the transaction cost of the process may be higher than the expected earnings. It is recommended that you consider this when supplying very low amounts.
How do I withdraw? To withdraw, you need to go to the "Dashboard" section and click on “Withdraw”. Select the amount to withdraw and submit the transaction. Also, you can use your “aTokens" as liquidity without withdrawing. You would need to make sure there is enough liquidity (not borrowed) in order to withdraw, if this is not the case you would need to wait for more liquidity from suppliers or borrowers repaying.
Are there any transaction fees for Lenders? Currently, Unlockd doesn't charge any fee for transacting in the protocol.
{% hint style="info" %} If you still have questions or issues, feel free to reach the Unlockd team in the official [Discord](https://discord.gg/unlockd) or [Telegram](https://t.me/Unlockd_Finance) channel. {% endhint %} # Borrowing FAQ
Why would I borrow against my NFTs instead of selling them? Selling your assets means losing the potential upside value gain and the utilities, triggering a capital gains tax event. By borrowing, you can obtain liquidity (working capital) without selling your assets and not incurring in capital gains taxes. Users are mainly borrowing for unexpected expenses, leveraging their holdings, or for new investment opportunities.
How do I borrow? [How to borrow](/unlockd-v1/unlockd-at-a-glance/borrowers/how-to-borrow)
How much I can borrow? The maximum amount you can borrow depends on the value of the NFTs you have supplied as collateral and the available liquidity. For example, you can’t borrow an asset if there is not enough liquidity or if your [health factor](/unlockd-v1/protocol-mechanics/liquidations/health-factor) doesn’t allow you to. The amount you can borrow depends directly on the [Loan-To-Value ratio.](/unlockd-v1/protocol-mechanics/dynamic-loan-to-value)
What asset do I need to repay? You repay your loan in the same asset you borrowed. For example, if you borrow 1 ETH you will pay back 1 ETH + interest accrued.
How much will I pay in interest? The interest rate you pay for borrowing assets depends on the [borrowing rate, ](https://risk.unlockd.finance/liquidity-risk/borrow-interest-rate)which is derived from the supply and demand ratio of the asset. It changes constantly. You can find your current borrowing rate at any time in your dashboard.
Can I access the utility of my NFT if there is an active loan against it? Depends on the utility. We are working towards full [True Ownership](/unlockd-v1/protocol-mechanics/true-ownership). At the moment, you can check the [available utilities](/unlockd-v1/protocol-mechanics/instant-loans#keep-collateral-utility).
What is the Health Factor? The health factor is the numeric representation of the safety of your deposited assets against the borrowed assets and its underlying value. The higher the value is, the safer your NFT is against a liquidation scenario. If the health factor reaches 1, the liquidation of your deposits will be triggered. An asset with a Health Factor below 1 can get liquidated. The health factor depends on the liquidation threshold of your collateral against the value of your borrowed funds. If you would like to know more technical details about the health factor calculation, you can find those [here](/unlockd-v1/protocol-mechanics/liquidations/health-factor).
What happens if my Health Factor is reduced? Depending on the price fluctuation of your deposited NFT, the Health Factor will increase or decrease. If your Health Factor increases, it will improve your borrow position by making the liquidation threshold more unlikely to be reached. If the value of your collateralized asset against the borrowed assets decreases instead, the Health Factor is also reduced, causing the risk of liquidation to increase.
When do I need to pay back the loan? There is no fixed time period to pay back the loan. As long as your position is safe, you can borrow for an undefined period. However, as time passes, the accrued interest will grow making your Health Factor decrease, which might result in your deposited assets becoming more likely to be liquidated.
How do I pay back the loan? To pay back the loan, you simply go to the Borrowings section of your dashboard and click on the repay button for the asset you borrowed and want to repay. Select the amount to pay back and confirm the transaction.
How do I avoid liquidation? To avoid the reduction of your Health Factor leading to liquidation, you can repay the loan to increase your health factor. In the future, you will be able to deposit more assets to the loan's collateral.
Where can I learn more about what happens if my loan may be liquidated? [Liquidations FAQ](/unlockd-v1/frequently-asked-questions/liquidations-faq)
How does Unlockd calculate the value of my collateralized NFT? Non-Fungible-Tokens provided for NFT-backed loans should be valued independently instead of using floor prices. Our [appraisal mechanism](/unlockd-v1/protocol-mechanics/nft-appraisal) relies on several third-party tools that appraise each individual NFT fairly, according to different models, input variables, and data science techniques.
When I give Unlockd access to manage an asset in my wallet, will this apply to all my assets? Approvals happen at the NFT contract level. Once you have approved or granted Unlockd access to manage an asset, the Unlockd smart contract will have access to all of your assets minted on that contract. The NFTfi smart contract will not have access to manage NFTs minted on other contracts though. *For example, if you approve a BAYC and you have multiple apes and also a CryptoPunk, our smart contract will have the ability to manage all of your apes but not your CryptoPunk.* Remember - the only way for the contract to move the asset is for you to start a loan on the asset, so this can not happen automatically.
Do Borrowers pay gas fees? Borrowers will pay gas fees for the operations listed below: * Approving Unlockd to interact with your NFT (once per NFT collection). * Approving the Unlockd smart contract to spend (repay) wETH for the first time (this is a one-time transaction) * Starting a loan * Repaying a loan (each time you repay any amount)
Are there any transaction fees for Borrowers? Currently, Unlockd doesn't charge any fee for transacting in the protocol.
{% hint style="info" %} If you still have questions or issues, feel free to reach the Unlockd team in the official [Discord](https://discord.gg/unlockd) or [Telegram](https://t.me/Unlockd_Finance) channel. {% endhint %} # Liquidations FAQ
What is a liquidation? A liquidation is a process that is triggered when a borrower's [health factor](broken://pages/yVSNUTDwW36j2nzlv4I5) goes below 1 due to their collateral value not properly covering their loan/debt value. This might happen when the collateral decreases in value or the borrowed debt increases in value against each other. The Liquidation Process allows third parties to participate in the health of the overall protocol by acting in their own interest (to receive the discounted NFT) and as a result, ensure loans are sufficiently collateralized.
Can you give me an example of how a liquidation could be triggered? Sure! Suppoose the price of a BAYC NFT is 100 ETH when you borrow 40 ETH instantly on Unlockd. Assume the [Liquidation Threshold](#what-is-the-liquidation-threshold) ($$liqThreshold$$ = $$80%$$) in the protocol. $$BAYC::NFT= \begin{cases} \text{Price} &100:ETH\ Borrow&40: ETH \end{cases}$$ If the price drops to 50 ETH, the [Borrower Grace Period](/unlockd-v1/protocol-mechanics/liquidations/borrower-grace-period) can be triggered since the Health Factor of your NFT-backed loan is below 1. Let's see why! Remember that the [Health Factor](/unlockd-v1/protocol-mechanics/liquidations/health-factor) formula is: $$HF = \dfrac{valuation \cdot liqThreshold}{debt+interest}$$ Therefore, $$HF = \dfrac{50\cdot 80%}{40 + Interest} < 1$$ An intuitive way to understand liquidations is through a liquidation price. If the asset goes below your liquidation price, your loan is considered unhealthy. We can force $$HF=1$$ and see what $$valuation$$ is (assuming $$interest = 0$$): $$1 = \dfrac{valuation\cdot 0.8}{40+interest} \implies valuation = \dfrac{40+interest}{0.8} = \dfrac{40}{0.8} = 50ETH$$ If we rename $$valuation$$ to $$liqPx$$ we can obtain the general formula: $$liqPx = \dfrac{debt+interest}{liqThreshold}$$
What happens if my collateral gets liquidated? In a liquidation event, the borrower permanently loses ownership of their NFT and the loan is terminated. Someone else will own the NFT.
How is the NFT liquidated? The NFT to be liquidated is put up for auction in Unlockd's Liquidation Marketplace with an Initial Bid, which is the maximum value between the outstanding debt (plus liquidation fee) and what the protocol could get if we immediately liquidated such NFT in one of the [External Liquidation Pools](/unlockd-v1/protocol-mechanics/liquidations/liquidation-process/external-liquidation-gateways). $$bid\_0 =max(debt+fees,: ELP's)$$ However, there are multiple possible scenarios as outcomes. Check [this diagram ](/unlockd-v1/protocol-mechanics/liquidations/liquidation-process#liquidation-process-flow-diagram)to learn about all of them.
What is the liquidation threshold? The liquidation threshold is the percentage at which a position is defined as undercollateralised. For example, a Liquidation threshold of 80% means that if the value rises above 80% of the collateral, the position is undercollateralised and could be liquidated. The delta between the LTV and the Liquidation Threshold is a safety mechanism in place for borrowers.
Will my loan be liquidated if the price of ETH drops? No. All NFTs are denominated in Ether instead of stablecoins on Unlockd. The price of Ether and the price of NFT are not necessarily related.
Will I be instantly liquidated if my Health Factor drops below 1? No. You will have a variable period of time to repay part of the loan (or the entire debt + interest) and 'save' it from liquidation. This is called the [Borrower Grace Period](/unlockd-v1/protocol-mechanics/liquidations/borrower-grace-period) (BGP), which is dynamic depending on the collateral price fluctuations. However, if the NFT in liquidation is purchased at buyout price at any moment of the BGP, you will immediately lose ownership of the collateral and your loan will be liquidated.
Does the Borrower Grace Period last exactly the same as the Liquidation Auction? Not exactly. The real Borrower Grace Period ends 15 minutes earlier than calculated by our [Risk Framework](https://risk.unlockd.finance/), leaving a margin of 15 minutes for the end of the Auction. *For example, if the provided BGP is initially 48 hours, the Liquidation Auction will last 48 hours, but the actual period to repay the loan will be 47 hours and 45 minutes. If the price of the NFT drops suddenly and the BGP is readjusted to 24 hours, the Liquidation Auction will last 24 hours, but the actual period to repay the loan will be 23 hours and 45 minutes.*
Is the loan still accruing interest while the Borrower Grace Period takes place? Yes, as the loan is still active and can be turned back to a safe state again if repaid.
What are the External Liquidation Pools? External Liquidation Pools are third-party protocols that support Unlockd's [Liquidation Process](/unlockd-v1/protocol-mechanics/liquidations/liquidation-process). They allow for the liquidation of NFTs instantly, at a fixed price stipulated by them or the market. Currently, only liquidations via NFTX are available. Learn more [here](/unlockd-v1/protocol-mechanics/liquidations/liquidation-process/external-liquidation-gateways).
Can I participate in the Liquidation Auction? Yes. Check this out: [How to liquidate](/unlockd-v1/unlockd-at-a-glance/liquidators/how-to-liquidate)
If I'm the highest bidder, how can I get the NFT? In case you have placed a bid and won the Auction, you will be able to claim the NFT through the Claim option. Learn more: [How to liquidate](/unlockd-v1/unlockd-at-a-glance/liquidators/how-to-liquidate#my-auctions)
If my bid is not the highest one, do I need to claim my bid? No. Your bid will automatically be refunded to your wallet in WETH.
What if there are no bids in the Auction? What if the collateral can't be liquidated in any External Liquidation Pool? What if...? All possible scenarios have been considered and explained in our [Liquidation Process](https://docs.unlockd.finance/unlockd-v1/frequently-asked-questions/pages/uk9Z5hZH216SwbxIN7su#a.-the-highest-bid-is-higher-than-all-the-liquidation-prices-in-the-external-liquidation-pools).
Are there any transaction fees for independent Liquidators? Currently, Unlockd doesn't charge any fee for transacting in the protocol.
{% hint style="info" %} If you still have questions or issues, feel free to reach the Unlockd team in the official [Discord](https://discord.gg/unlockd) or [Telegram](https://t.me/Unlockd_Finance) channel. {% endhint %} # The Lockeys FAQ
What are The Lockeys? The Lockeys are a collection of 3,500 NFT (non-fungible tokens) that allow their owners to be recognized as members of the Unlockd community, rock a really cool profile picture, access to multiple [utilities and benefits](/unlockd-v1/the-lockeys/perks-utility-and-rewards), and be part of the NFT x DeFi ecosystem legacy.
Can I mint a Lockey? No, they were sold out months ago. You can now buy them on [official marketplaces](/unlockd-v1/the-lockeys/marketplaces).
Which utilities do The Lockeys have? [Perks, utility & rewards](/unlockd-v1/the-lockeys/perks-utility-and-rewards)
How is that I get a full cashback on my mints? Unlockd currently has an active [Community Airdrop](https://airdrop.unlockd.finance). The amount airdropped to your address depends on your position in the ranking, which itself depends on the points you get by performing different social sharing actions. At the time of the snapshot, if you hold one or more Lockeys, the minimum amount you will receive via the Community Airdrop will be the value of the mints of those Lockeys in the Unlockd token, $UNLK. With this cashback mechanism, all your mints are basically free. If, due to your position in the ranking, you are entitled to an airdrop of a higher value than what you have paid for your NFT mints, a multiplier will be applied on that amount. This multiplier will increase with the number of Lockeys you hold in that same wallet.
Why should I care about early access? Many of the features of the Unlockd protocol are unique, combining your NFTs with DeFi. This means that having access to these features before other users will allow you to discover insights before anyone in the world and use them to your advantage., As a Lockey holder you will not only have early access to the mainnet protocol, but you will also be able to test all the features we will be deploying in beta on testnet. Exclusively for Lockey holders.
What type of events will holders be able to access? Private holders-only activities in our Discord server and our Metaverse space. Gaming, entertainment, alpha sessions with investors, founders and traders... to be announced soon!
What is the future of The Lockeys? As the [Codebreakers Prophecy](/unlockd-v1/the-lockeys/nft-genesis-collection#lore-and-universe) foretells, The Lockeys are preparing for the most awaited day of their robotic species, working very hard building Unlockd from the inside. That day will come at some point following the development of the protocol, and The Lockeys' universe will expand with news, lore and many surprises. Naturally, Lockey holders will be the first to know and benefit from this new path we are embarking on together.
Is there any difference in terms of NFT utility depending on the race or traits of my Lockey? No. All Lockeys grant the same benefits and utility. The only thing that may vary is their value in the secondary market according to the rarity of the traits. However, Key Supporter Lockeys and 1/1 Lockeys may have special perks in the future.
What are Key Supporters? Key Supporters are a very special group within the Unlockd community. Whether it is for their constant and positive activity on Discord and our social networks; their support by evangelizing in other communities; or their collaboration in areas of Unlockd such as moderation, content creation or development, they are part of an exclusive program of benefits and incentives. All Key Supporters were airdropped a random Lockey as a little token of appreciation, with the particularity that those have a special trait only obtainable in this way.
How do I claim my 'Lockey holder' role in Discord? If you own a Lockey, just head to the **#collabland-join** channel of The Lockeys section of our [Discord server, ](https://discord.gg/unlockd)click the '**Let's go**' blue button and link the wallet in which you hold your Lockey. It is a read-only connection. Do not share your private keys. We will never ask for your seed phrase. We will never DM you.
{% hint style="info" %} If you still have questions or issues, feel free to reach the Unlockd team in the official [Discord](https://discord.gg/unlockd) or [Telegram](https://t.me/Unlockd_Finance) channel. {% endhint %} # Governance & Token FAQ
When will the Community Airdrop be distributed? As soon as we launch our token.
When will the UNLK token be launched? This is still to be determined. We don't want to rush our decentralization journey and prefer to wait until defining a solid strategy that follows the market situation. However, we expect it to be somewhen in Q1-Q2 2023, but this may vary.
Why is so little information available about governance? We have published our [Token Allocation and Vesting Schedule](broken://pages/umyUSjLVNDEdcFb9bcvT) for the sake of transparency with our community, users and investors. We are still defining our governance mechanism, gauges and policies. We will update the **Decentralization** section as soon as we have those topics ready.
Will the token holders receive the fees from protocol transactions? In the future, they will. However, currently, Unlockd doesn't charge any fee for transacting in the protocol.
{% hint style="info" %} If you still have questions or issues, feel free to reach the Unlockd team in the official [Discord](https://discord.gg/unlockd) or [Telegram](https://t.me/Unlockd_Finance) channel. {% endhint %} # Troubleshooting
I cannot connect to the platform. * Make sure to select the correct network (Ethereum Mainnet). Normally on the wallet provider you can switch the network in the settings option. * On Ledger natively or over Metamask: * Make sure to unlock and select the Ethereum app. * Make sure contract data is allowed on the Ethereum app settings. * Coinbase * Use the scan QR option to connect. * If you want to access directly from Coinbase wallet just go to app.unlockd.finance on the browser within the app. * Wallet connect * Use the scan QR code to connect
Enable contract data on Ledger. Make sure to select the Ethereum app and enable contract data.\ \ To enable contract data: * Connect and unlock your Ledger device. * Open the Ethereum application. * Press the right button to navigate to Settings. * Then press both buttons to validate. * In the Contract data settings, press both buttons to allow contract data in transactions. * The device displays Allowed. Here's a [visual guide](https://teckers.com/uniswap-ledger/).
I cannot send transactions. Make sure you have enough ETH in your wallet to interact with the platform. You must have ETH in your wallet for the transaction costs-- without it you won't be able to interact. Depending on the network status, the cost of the transactions may vary. At least 0.05 ETH may be required to interact properly.
The site does not load. The following steps may solve your problems: * If you are using Brave browser, switch to another browser to see if the issues are coming from the browser. If it is related to Brave browser some helpful actions are: * Clearing cache data and cookies for the site * Hard refresh with control + F5 (or cmd + r) * Disable brave wallet (or the wallet not being used as default, for example, metamask, dapper, etc.)or other extensions that might be interfering with proper connection with the wallet * If the site still won't load after taking the steps above, you will have to use the platform in another browser. * Make sure your internet connection is working and stable * Restart the browser and try to connect again * Try to hard refresh the site with control + F5 * Check if there are any updates for your browser or wallet provider. If so, update it to the latest version.
My transaction is stuck pending confirmation. In this situation, make sure not to keep sending transactions, as every new transaction will be stuck pending the oldest transaction to be confirmed. You can get rid of the stuck transaction by speeding it up or canceling it. Depending on the wallet you are using, you may have that option natively.\ \ For example, metamask or trust wallet have both options to cancel or speed up transactions. Alternatively, if your wallet provider doesn't have this option, you can still drop the stuck transaction by sending a 0 ETH transaction to your address (to yourself) using the same nonce (number id). You can inspect the nonce in your transaction in [Etherscan ](https://etherscan.io)and use interfaces such as [MEW ](https://www.myetherwallet.com/)and [MyCrypto ](https://mycrypto.com/)to send this transaction with a higher gas cost and replace the stuck one. \ \ Here are a couple of guides about the topic for [MEW ](https://kb.myetherwallet.com/en/transactions/checking-or-replacing-a-tx-after-sending/)and [MyCrypto](https://support.mycrypto.com/how-to/sending/checking-or-replacing-a-transaction-after-it-has-been-sent).
{% hint style="info" %} If you still have questions or issues, feel free to reach the Unlockd team in the official [Discord](https://discord.gg/unlockd) or [Telegram](https://t.me/Unlockd_Finance) channel. {% endhint %} # Glossary
Annual Percentage Yield (APY) APY is the annual percentage yield, and it means your annual compounded return from an investment. Your compounded return includes interest generated from the initial deposit plus the interest earned on that interest.
Audit An audit is either an internal or independent comprehensive review of a concept, system, process, company, or product. A comprehensive audit includes a thoughtful and in-depth look at the structure, strengths, weaknesses, and vulnerabilities of the thing or process being audited. Audits may be either informal or formal audits and are meant to be a tool to find and analyze weaknesses, so that issues and problems discovered during an audit may be remediated, mitigated, or corrected.
Blockchain An immutable permanent public record or ledger of all transactions since the beginning of a cryptocurrency coin or token.
Coin A form of digital currency primarily used for payments or storage of wealth. Encryption algorithms secure coins. The coin's market price represents the value of the ownership of a divisible unit of the coin or token (another name for a coin, but a type of coin with greater functionality) at a given moment in time. This coin or token can represent a share of the ownership and/or governance of a coin, token, protocol, company, or project and all of the benefits that this may entail.
Collateral Collateral is the asset(s) that a user posts or lock-ups in order to take out a loan.
Collateralization The borrowing of a deposit asset or assets to seek further business activities such as Yield Farming. Collateralization can amplify gains or losses, and is thus, considered riskier than not borrowing funds.
Composability The measure of the usability and ability of the product to be used as a building block (or "money lego") in the construction of other products or domains. A protocol that is simple, powerful, and that functions well with other protocols would be considered to have high composability.
Compound Interest Once called the eighth wonder of the world by Einstein, compound interest allows greater interest rates and returns on investments by allowing interest gained to be automatically reinvested back in with the original deposits and accrued interest. This reinvestment period is based on the planned distribution of this interest which may be hourly, weekly, monthly, or an annual interest distribution. With compound interest, the greatest gains are often seen over a certain period in time, with a notably sharp rise in the value of investments seen at longer periods. In general, the longer a deposit benefits from compound interest, the much greater the overall gains when compared to gains made from simple interest.
Cryptocurrency A form of digital currency protected by encryption algorithms and represented as a digital coin or token. Cryptocurrency coins are programmed to systems and networks for: * Minting * Release * Reward * Distribution * Governance * Ability to make future changes These digital coins or tokens include a ledger or blockchain record of all transactions that occur on their respective networks.
DAO (Decentralized Autonomous Organization) A Decentralized Autonomous Organization (DAO) is the governing body of a decentralized protocol or project, and all the token holders of the protocol can participate in the decision-making process of the DAO, and all the decisions are available on the blockchain for the public to see.
dApp DApps are decentralized applications built on a decentralized peer-to-peer network supported by distributed blockchain ledgers. Smart contracts stored on a blockchain enable DApps to process data through distributed networks and execute transactions. DApps have no central authority or a single point of ownership, and once a developer has released a DApp’s codebase, others can build on top of it. DApps are always accessible and don’t have a single point of failure. DApps can be developed to create a wide range of applications, including decentralized finance, web browsing, gaming, social media, crypto wallets, etc.
DeFi DeFi, or Decentralized Finance, is at its root a set of Smart Contracts running independently on blockchains such as the Ethereum network. Smart Contracts may or may not interact with other smart contracts and even other blockchains. The goal of DeFi is to enhance the profitability of investors in DeFi through automated smart contracts seeking to maximize yields for invested funds. DeFi is marked by rapid innovative progression and testing of new ideas and concepts. DeFi often involves high risk investing sometimes involving smart contracts that have not been audited or even thoroughly reviewed (a review is not as comprehensive as an audit, but may also be included as part of an audit). Due to this and other reasons, DeFi is conventionally considered to be riskier than CeFi or traditional investing.
Ethereum Bitcoin is the original cryptocurrency but Ethereum, which launched in July 2015, allows for much more complexity through the use of smart contracts and a Turing complete programming language. Thanks to the ERC-20 protocol, Ethereum has many cryptocurrency coins such as LINK, CRV and YFI built on top of Ethereum, each with their own set of rules.
ERC-20 A cryptocurrency protocol based on the Ethereum blockchain. An ERC-20 coin, by definition, uses this protocol.
ERC-721 **ERC-721 is** a free, open standard that describes how to build non-fungible or unique tokens on the Ethereum blockchain. While most tokens are fungible (every token is the same as every other token), ERC-721 tokens are all unique.
Gas Fees Gas fees are the fees charged for facilitating a transaction on a blockchain network. These fees, paid in a blockchain’s native currency, are designed to compensate miners in exchange for the computational power they use to verify the transaction. Gas fees on a blockchain network are not fixed and can change depending on various factors such as demand and supply, transaction throughput per second, etc.
Governance Governance refers to the control and use of a Governance coin, token, and/or project through various measures to grow the ecosystem or product and to maximize gains for governance token holders. Governance refers to the control and use of a Governance coin, token, and/or project through various measures to grow the ecosystem or product and to maximize gains for governance token holders.
gwei A unit of measurement of gas fees for transactions on the Ethereum network or ERC-20 coin networks.
Hold Owning an asset without selling it.
Leverage The use of multipliers on exchanges or markets that allow leveraged trading, such that providing 1 BTC deposit on such an exchange could provide the investment power of 10 to 100 BTC if used at 10x to 100x leverage. Leveraged trades can amplify gains greatly. However, should the trade be unprofitable, it can also amplify losses greatly. The downside of this risky approach is that the entire deposit, 1 BTC in this example, could be lost in a liquidation event where a margin call on this leveraged trade could result in the entire deposit being lost during times of massive volatility and insufficient reserve funds for the investor, trader, or CII.
Liquidity Pools A liquidity pool is a collection of crypto tokens secured under a smart contract on the DeFi platform. With smart contracts, anyone can deposit their tokens into the liquidity pool to provide liquidity on the platform and receive rewards in the form of trading fees or native tokens in return. Users who lock up their assets in liquidity pools are called liquidity providers.
Liquidity Providers Users who lock up their crypto assets into liquidity pools for the agreed-upon time to help with the decentralization of trading are called liquidity providers. In return, the liquidity providers are rewarded with fees generated by trades on that platform, new tokens, etc.
Mainnet A mainnet is an independent, completely developed blockchain running its own network with its own technology and protocol that makes it possible to send and receive digital currencies. In contrast, testnets run on top of other popular networks and are used to troubleshoot and experiment with any new features on a blockchain. Most blockchain networks first roll out their testnets to catch any issues and test the blockchain before they launch the Mainnet.
Multisig Wallet A multiple signature wallet is a cryptocurrency wallet that controls access and changes to one or more Smart Contracts. Community governed projects like a DAO often require multiple signers to approve a transaction before it will be executed. For community-based efforts, Multisig wallets for DAOs and DeFi projects are often implemented as 6 of 9 wallets, where 6 of 9 community wallet signers must agree to sign a transaction before a Smart Contract can be implemented.
Pool A smart contract containing shared amounts of assets provided by depositors. Pools are either used in Automated Market Makers (AMMs)for optimized trading purposes, lending aggregation (yPool), or in shared yield farming strategies (yVaults), among other things.
Protocol DeFi protocols are programs or codes written on the blockchain and used for designing DApps. These protocols are represented by DApps that provide access to peer-to-peer financial services. DeFi protocols are autonomous programs designed to address setbacks in the traditional finance industry.
ROI Return On Investment. The gains or losses on an investment. For example, doubling your investment in an asset would be a 100% gain, or 100% ROI. Losing all of your investment would be a 100% loss, or -100% ROI.
Smart Contracts Smart contracts are self-executing contracts representing the terms and conditions of the buyer-seller agreement inscribed directly into lines of code. The code and agreement operate on the blockchain and control the contract’s automatic execution once predetermined requirements are met. Smart contracts ensure that transactions, such as DeFi lending, borrowing, etc., are trackable and irreversible and happen in a trustless manner, without any intermediary’s involvement or time loss.
Stablecoins Stablecoins are cryptocurrencies, the value of which is pegged to another currency, such as fiat currency, commodity, or financial instrument. The most popular stablecoins pegged to the US Dollar are USDT, USDC, DAI, etc.
Testnet A testing network for a new coin, project, or product, or for potential improvements to an existing product or offering. Testnets are used to test the viability and vulnerability of new ideas, concepts, code, and processes prior to moving on to a production network or networks of some sort.
Token A type of coin, except with much greater functionality. Tokens can also be used as a method of payment like coins, but unlike coins, they can excel at other use cases such as the democratic governance of a protocol or system, or as a means to use underlying coins to make liquidity tokens from these coin deposits. These liquidity tokens could then be used in innovative new strategies elsewhere via delegated funds to amplify gains with little risk to the underlying asset the liquidity token is based upon. An investor could choose this action so that further gains to their assets may be made by using the automated actions of intelligent Smart Contracts to optimize gains.
Token's Contract Address A token’s contract address is the address location of the token contract or the location of a smart contract that manages the balance of all token holders.
TVL Total Value Locked (TVL) is the total value of all the crypto assets staked in the smart contracts of a DeFi platform. It indicates the funds available on various DeFi platforms for transactional, borrowing, and lending purposes. TVL has emerged as a key metric for gauging interest in the crypto industry and has been developed primarily to assess decentralized protocols and the DeFi system as a whole. A higher TVL suggests that a DeFi platform is healthy and in high demand.
Volatility In investing, a measure of how rapid changes are seen to the price of an asset or market. Newer early-stage technology companies and projects in the explosive growth stage tend to see very high volatility in the price of their assets in their early days. Should the company or project behind the volatile asset see their venture survive over time, this volatility tends to be much reduced as the company's market cap grows and matures.
Wallet A software or hardware cryptocurrency wallet that can hold a variety of coins. Wallets may also be considered a cold wallet - meant to be used for long term storage of crypto coins for security purposes or a hot wallet, which is considered more at risk than a cold wallet due to its inaccessibility (usually offline). A hot wallet is meant to be used for active or semi-active transactions in and out of that wallet, as well as a place to withdraw or add funds.
Wallet Address A wallet address is a randomly generated set of numbers and letters that you use for sending and receiving transactions. An address can be generated within seconds for free without needing an intermediary. You can freely share your public address with others to enable them to send digital assets to your address. Wallet addresses are created using hashing algorithms, which adds an extra layer of encryption for enhanced security. Public and private keys are needed to access a wallet address.
Yield Farming Yield farming is the process of lending or staking your cryptocurrency tokens in DeFi protocols in return for interest or other rewards. In yield farming, crypto holders deposit their funds to liquidity pools to provide liquidity to other users. Yield farmers measure their returns in terms of annual percentage yields (APY).
# Tutorials
Dashboard walkthrough From the Dashboard you can see the different tokens supported by the protocol, which you can deposit to earn an APY, as well as Borrow with them. You can also access the **Collections** that the protocol supports to use as collateral to borrow. These Collections will be increasing all the time. From **My Deposits** you can access to see the deposits you have active and be able to add more supply, or withdraw the partial or total amount you want at any time. In the sub-section **My Loans** you will access the Borrow section from which you can deposit NFTs as collateral to borrow, and also see the Loans you have already borrowed and borrow more or Repay a partial or total part of your debt. If you Repay in full you will recover the NFT in your Wallet. Finally, from the **My Auctions** sub-section you can see the auctions in which you have participated and their status. In case you have won an auction, you can Claim that NFT from that section and receive it in your wallet.
{% tabs %} {% tab title="Lending" %} {% content-ref url="/pages/L3P9V0jgH7rsIYOz98yw" %} [How to lend](/unlockd-v1/unlockd-at-a-glance/lenders/how-to-lend) {% endcontent-ref %} {% endtab %} {% tab title="Borrowing" %} {% content-ref url="/pages/jMgeOkCXlspZemYbzCnJ" %} [How to borrow](/unlockd-v1/unlockd-at-a-glance/borrowers/how-to-borrow) {% endcontent-ref %} {% endtab %} {% tab title="Liquidating" %} {% content-ref url="/pages/kRhU9pC4RrGTXEndCbRb" %} [How to liquidate](/unlockd-v1/unlockd-at-a-glance/liquidators/how-to-liquidate) {% endcontent-ref %} {% endtab %} {% endtabs %} # Social Media | Twitter | | | ---------------------- | ---------------------------------------------------------------------------------------------------------------------------------------- | | Instagram | | | Linkedin | | | Youtube | [https://www.youtube.com/channel/UCMl-FS\_nMvVkzH4ZcM0U6-A](https://www.youtube.com/channel/UCMl-FS_nMvVkzH4ZcM0U6-A?sub_confirmation=1) | | Telegram Announcements | | # Media Features {% embed url="" %} # Careers ## We're hiring! ### Community Manager Want to help Unlockd grow and drive our great community? Apply for our part-time Community Manager position (remote) → ☉ Knowledgeable about Web3, GameFi, DeFi ☉ Fluent in English ☉ Proactive, autonomous ☉ Dynamization + Moderation + Social Media # The Home of Liquidity for RWAs For too long, liquidity in real-world assets has been a privilege limited to a select few. Not anymore.
Unlockd is pioneering a new chapter in financial services by reshaping the landscape of real-world assets (RWAs) liquidity. Our mission is clear: to break down the traditional barriers that have long confined RWAs to the realm of institutional investors and centralized entities, opening up a wealth of opportunities for individual investors. ### Redefining RWAs liquidity with a trillion-dollar opportunity RWAs represent the largest untapped market in DeFi - a staggering $16 trillion opportunity. Yet liquidity remains constrained for most. These assets have been confined to institutions and accredited investors, gated by complexity and barriers to entry. But something profound is happening: retail participation in RWAs is reaching an inflection point. Individual investors are now demanding accessibility to real-world, less-liquid asset classes. Unlockd is making this a reality. **Our permissionless protocol unlocks instant liquidity for tokenized real-world assets through a seamless lending experience requiring only a wallet.** No institutions. No middlemen. No financial gatekeepers. The possibilities this unlocks for wealth creation and financial inclusion are immense. With streamlined access to RWA liquidity, we can transform RWAs into the most dynamic and exciting asset class in the world for the first time in history. The RWA revolution is here. And Unlockd sits at the forefront with an innovative model to make RWAs liquid, accessible, and abundant for all. ### Democratizing finance with the only permissionless RWA-backed lending protocol Complexity and red tape have long blocked mainstream access to real-world assets. But the desire for permissionless finance persists. Investors are demanding RWA exposure without gatekeepers. That’s why we built Unlockd - the first inclusive RWA liquidity solution requiring only a wallet. We believe RWA lending should be accessible to all, not just institutions. With cutting-edge technology, we provide **instant RWA loans at optimal rates** **through an elegant Peer-to-Pool model** requiring no middlemen. No Peer-to-Peer or centralized complexity here. Just a wallet. Other platforms are limited by geography, accreditations, and legacy finance barriers. Unlockd has no limits. Our scalable architecture and intuitive interface invite RWA investors globally to seamlessly access liquidity and retain 100% of the asset ownership and utility. Powered by AI and machine learning, our pricing engines and dynamic risk algorithms adapt to any market condition for responsible asset-backed lending. No other protocol unlocks RWA value instantly with such advanced automation and accessibility. RWA lending is complex no more. Unlockd is the gateway to boundless liquidity for tokenized real-world assets - a permissionless ramp for the next generation of global RWA investors. *** ## What are these docs about? Here you will find detailed insights into how our protocol functions, step-by-step guides on utilizing our platform, and a wealth of resources to assist you in navigating the RWA market with confidence and ease. Our documentation is designed to be your go-to source for all things Unlockd, providing clear, concise, and user-friendly information to ensure you make the most of our innovative platform. We want users from all backgrounds, geographies, and experience levels to seamlessly access the trillion dollar RWA opportunity. That is why our documentation is designed for clarity and ease-of-use above all else. # What is Unlockd?
Unlockd is the only permissionless RWA liquidity protocol powered by advanced AI where users can participate as depositors or borrowers. It facilitates the safest, most secure, and cost-effective way to borrow against **tokenized Real-World Assets and financial assets** with instant loans, as well as risk-free, auto-compounding yield directly in USDC for lenders. It is, at its core, a set of smart contracts deployed to the Ethereum Mainnet (and soon to multiple L2s), where LPs (lenders) deposit their assets in pools to receive yield in exchange for their liquidity contribution. This is a **Peer-To-Pool** model, more efficient and fair than other Peer-To-Peer models. Borrowers take permissionless loans with no fixed expiration date, instantaneously, with a fair interest rate, and against their tokenized assets — if they are supported. Our advanced AI ensures the best loan conditions (asset valuation and smart Loan-To-Value), tailored to your needs, without the complexity. ## Everything you need to know, in a nutshell. #### **Permissionless, Instant Loans Against RWAs** * **Efficient Yield Generation**: Lenders contribute liquidity to pools, receiving yields in return. This Peer-to-Pool system is more efficient than traditional Peer-to-Peer models. * **Accessible Platform**: Unlockd's permissionless nature eliminates complex verification, welcoming a broad user base. * **Rapid Loan Processing**: Borrowers receive instant loans against eligible RWAs, with plans for future cross-chain functionality. * **Fair Interest Rates**: The platform ensures reasonable rates, without fixed loan expiration dates. #### **AI-Driven Appraisals and Real-Time Risk Assessment** * **Accurate RWA Valuation**: Partnering with leading appraisal firms, Unlockd uses AI and machine learning for individual asset assessments, avoiding reliance on floor prices. * **Adaptive LTV Rates**: Dynamic LTV adjustments are made in response to real-time market data, benefiting both borrowers and lenders. #### **Full Custody & Ownership Retention with Unlockd Account** * **True Custody Feature**: Borrowers maintain full custody and ownership rights of their collateralized assets through their Unlockd Account. This ensures that users remain the custodians of their assets, with Unlockd only intervening to prevent unauthorized transactions during active collateral periods. * **Compliance and KYC Adherence**: By retaining custody of their assets through their Unlockd Account, users ensure compliance with KYC regulations and other requirements from asset issuers. This setup makes ownership and accountability transparent and verifiable, facilitating regulatory adherence and proof of ownership and reducing risks. #### **Robust and Secure Ecosystem** * **Proven Security Standards**: Audited by multiple auditing firms, Unlockd's protocol avoids common vulnerabilities of other lending platforms. * **Comprehensive Risk Framework**: A specialized framework evaluates asset and liquidity risks, providing tailored LTV for individual assets. #### **Innovative Platform Features** * **Multi-Asset Collateral**: Unique bundling of various assets into one loan enhances borrowing capacity and diversifies risk. * **Unlockd Marketplace**: Offers flexibility in asset transactions, allowing listings across all aggregated marketplaces, instant selling and auctions with attached debt. * **Customizable Notifications**: Integration with hashmail enables users to stay informed about their investments and protocol updates. #### **Future Prospects** * **Community-Driven Governance**: Transitioning towards decentralized governance, Unlockd is supported by a robust community and prominent investors. * **Planned Developments**: Introduction of transaction fees to benefit token holders and expand the DAO treasury, along with ongoing decentralization efforts. # Why is Unlockd different? The next move in permissionless RWA liquidity. Unlockd's innovative approach to RWA-backed lending focuses on four key areas that set up apart: * Take loans instantly with the only permissionless protocol in RWA Finance. * Enjoy AI for real-time asset appraisal and mathematically optimal loan rates. * Bundle up to 100 RWAs in the same loan for diversified risk and enhanced borrowing power. * Keep enjoying all the compliance adherence, custody and utility associated with owning your assets while deposited. ## Permissionless, Simple & Instant Unlockd revolutionizes the RWA lending market by prioritizing accessibility and simplicity, being the first permissionless protocol that allows instantly borrowing against real estate, luxury watches, collectibles, precious metals, gemstones, fine wine and financial assets. 1. **Ease of Access**: Our platform eliminates complex verification processes, making it accessible to everyone and fostering a truly inclusive financial environment. 2. **Simplified User Experience**: We have designed our interface to be intuitive, allowing users to easily navigate our lending options without unnecessary complications. 3. **Instant Loan Execution**: Understanding the dynamic nature of the crypto market, Unlockd ensures immediate loan transactions. Once terms are accepted by the borrower, funds are quickly disbursed, empowering users to seize market opportunities promptly. ## AI & Real-Time Risk Assessment for the Best LTV At Unlockd, we integrate cutting-edge AI technology to redefine asset appraisal and risk assessment in RWA-backed lending: 1. **Advanced Collateral Appraisal**: The key to our precise collateral valuation lies in our data providers' use of sophisticated machine learning algorithms. Unlike traditional methods that rely on floor prices, our approach assesses each asset individually, determining its true value based on a comprehensive analysis of market data and trends. This method ensures a more accurate, fair, and reliable appraisal of each asset. 2. **Dynamic LTV Determination**: Our AI-driven system constantly analyzes data of liquidity, volatility and market depth, offering realistic and advantageous Loan-To-Value rates, benefiting both borrowers and lenders. 3. **Adaptive Risk Modeling**: Our algorithms are tailored to adapt to market fluctuations in real-time, ensuring a balanced and secure lending platform by adjusting LTV rates in response to market trends. ## Multi-Asset Collateral: Unprecedented Loan Flexibility Unlockd introduces the ability to bundle multiple RWAs from various collections or types into a single loan. This unique approach offers several advantages: 1. **Enhanced Borrowing Power**: By bundling diverse assets into one loan, borrowers can leverage a broader range of assets, increasing the overall loan value they can access. 2. **Risk Diversification**: This bundling allows for a more balanced risk profile. By not relying on a single asset or asset type, borrowers can mitigate the impact of market fluctuations on individual assets. 3. **Simplified Management and Gas Efficiency**: Managing one bundled loan instead of multiple individual loans streamlines the borrowing process, making it more user-friendly and extremely gas-efficient. ## Full Custody with the Unlockd Account Unlockd ensures that borrowers retain full custody and ownership of their collateralized assets through our innovative Unlockd Account technology. This feature allows users to remain the custodians of their assets, with Unlockd only intervening to prevent unauthorized transactions during active collateral periods. 1. **Custody Preservation**: Unlike traditional lending platforms, which require you to forfeit control over your assets, Unlockd allows borrowers to maintain full custody. This means that while your assets are collateralized, you retain complete control and ownership, ensuring security and regulatory compliance. 2. **The Unlockd Account**: The Unlockd Account is a unique shared wallet technology that securely holds assets as collateral while preventing unauthorized transfers. This approach ensures that borrowers continue to own and control their assets, aligning with compliance and KYC regulations by maintaining transparent and verifiable ownership. Additionally, maintaining ownership rights enables users to access the full utility of their assets. This includes participating in token-gated events, on-chain activities, airdrops, and staking rewards, even while the assets serve as loan collateral. # Team and Advisors {% tabs %} {% tab title="Core Team" %} Our core team comprises a mix of successful serial entrepreneurs, crypto experts, NFT collectors, growth specialists and talented developers. ### Business & Operations [Jorge Schnura](https://www.linkedin.com/in/jorgeschnura/) - Founder, CEO [Carlos Otermin](https://www.linkedin.com/in/carlosotermin/) - Founder, COO [Tamara Lerner](https://www.linkedin.com/in/tamara-lerner/) - Head of Operations ### Development [Filipe Venancio](https://www.linkedin.com/in/fepvenancio/) - Chief Technology Officer [Daniel Martín](https://www.linkedin.com/in/damarnez/) - Sr. Blockchain Dev [Manuel Barzi](https://www.unlockd.finance/_next/image?url=https%3A%2F%2Fcdn.sanity.io%2Fimages%2F5qqgs8mw%2Fdb-unlockd%2F9c9951b78036e5c69043d869046669428714aa45-2312x2312.jpg%3Fw%3D512%26q%3D100\&w=2048\&q=75) - Sr. Frontend Dev [Xabier Oterino](https://www.linkedin.com/in/solthodox/) - Blockchain Dev [Vlad Micliuc](https://www.linkedin.com/in/vladmicliuc/) - Frontend Dev [Enric Borrallo](https://www.linkedin.com/in/eborrallo/) - Software Engineer & DevOps [Alejandro Roigé](https://www.linkedin.com/in/alejandro-roig%C3%A9-v%C3%A1zquez-608bb4210/) - Data Scientist ### Marketing [Berni Bouzas](https://www.linkedin.com/in/bbouzas/) - Business Development & Data Operations Lead [Roger Guardia](https://www.linkedin.com/in/rogerguardia/) - UI/UX and Design Lead {% endtab %} {% tab title="Advisory Board" %} ### Gabby Dizon ([🔗](https://www.linkedin.com/in/gabbydizon/)) Founder and CEO of **YGG** (Yield Guild Games) ### Colin Goltra ([🔗](https://www.linkedin.com/in/gabbydizon/)) COO of **YGG** (Yield Guild Games) and seasoned NFT collector. ### Ben Noble ([🔗](https://www.linkedin.com/in/benjaminmnoble/)) Founder and CEO of **Multiplied** ### Olga Vázquez ([🔗](https://www.linkedin.com/in/olgavazquez/)) Principal at **Theta Capital** ### Leah Callon-Butler ([🔗](https://www.linkedin.com/in/leahcallonbutler/)) Founder and CEO of **Emfarsis** ### Josep Bové ([🔗](https://www.linkedin.com/in/josep-bov%C3%A9-50381916b/)) Software Engineer at **AAVE** and blockchain specialist. {% endtab %} {% endtabs %} # Supported RWAs ## Physical Assets | Asset Type | Protocol | | ---------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | | Real Estate |

RealT (Pending integration)
VESTN (Pending integration)

| | Watches |

Watches.io ✅

Unikura ✅
4K (Pending integration)

| | Collectibles |

Courtyard (Pending integration)
Unikura (Pending integration)
4K (Pending integration)

| | Gems & Precious Metals |

Tiamonds (Pending integration)
Mattereum (Pending integration)

| | Fine Wine | GrtWines (Pending integration) | ## Financial Assets | Asset Type | Protocol | | ---------------- | ---------------- | | Private Funds | *Coming soon...* | | Private Equity | *Coming soon...* | | Senior Credit | *Coming soon...* | | Treasuries Bills | *Coming soon...* | | Secondaries | *Coming soon...* | | Venture Capital | *Coming soon...* | | Stocks | *Coming soon...* | *** {% hint style="info" %} #### Loan Availability Challenges with Certain Assets Despite being issued by one of our supported partners, some assets may temporarily not be available for loans. This is primarily due to challenges in obtaining reliable appraisal data for these specific assets. We are actively working towards resolving these data issues to ensure broader asset support in the near future. {% endhint %} # Lenders Unlike peer-to-peer loans marketplaces, Unlockd operates with a much more efficient system of pooled liquidity. Unlockd's liquidity pools are smart contracts responsible for locking tokens, USDC for instance, to ensure the liquidity of those tokens to be borrowed by users when they take out a loan. {% content-ref url="/pages/pOpqTLKY43svt2oWTdvS" %} [Liquidity Pools](/protocol-mechanics/liquidity-pools) {% endcontent-ref %} ## Advanced Pooled Liquidity System Unlockd stands apart from conventional lending platforms with its liquidity pools. These smart contracts, specifically for USDC, lock in assets to ensure consistent liquidity for borrower loans. This model enhances efficiency, offering a dynamic lending and borrowing environment. As a lender on Unlockd, your contributions provide vital liquidity, enabling efficient lending processes and earning potential, all within a framework of robust risk mitigation. ## Deposit Liquidity and Earn Yield As a lender, you can deposit your assets into these pools and in return, receive uTokens, representing your share in the pool. This process offers flexibility: * **No Deposit Limits**: You can deposit any amount, with no minimum or maximum limits. * **Transaction Cost Consideration**: For smaller amounts, it’s important to consider that the transaction cost might outweigh the expected earnings. This is crucial for optimizing your investment strategy. * **Dynamic APY**: The yield on uTokens varies with market conditions. Each asset has its own supply and demand dynamics, influencing its Annual Percentage Yield (APY). * **Continuous Earnings**: Your earnings are a share of the interest accrued by borrowers when they repay their loans. Future plans may include additional earnings through UNLK token rewards. ## Maximizing Earnings with Auto-Compound Unlockd's lending pools are designed to maximize your earnings and optimize the taxation derived from your profits by providing liquidity. When you deposit your assets and receive yield, it is automatically reinvested in the pool to compound and grow your return exponentially. {% hint style="success" %} Unlockd's auto-compounding feature offers tax efficiency for lenders. Your earnings are reinvested automatically, delaying capital gains taxes until you withdraw, making Unlockd an effective choice for tax-smart yield generation. {% endhint %} ## Withdraw assets * **uToken Redemption**: Withdraw your liquidity by returning the uTokens received during your deposit. These tokens are burned, and your assets are returned. * **Liquidity Availability**: Withdrawals depend on the available liquidity in the pool. If the pool’s resources are tied up in loans, you may need to wait for liquidity to free up from either additional lender contributions or borrower repayments. ## Minimized Lenders' Risk The primary risk for lenders is the potential default of borrowers and market volatility affecting the value of liquidated collateral. Unlockd mitigates these risks through: * **Multi-Asset Collateral**: This feature allows borrowers to use multiple RWAs as collateral, diversifying risk. * **Diluted Impact**: The pooled liquidity model spreads risk across numerous participants, reducing the impact of individual defaults. * **Dynamic LTV Models**: These models are designed to minimize the occurrence of loss, except in extreme market conditions. * **Optimized Liquidation Process**: Our smart system calculates the most effective liquidation method, including traditional auctions or External Liquidation Gateways.
# Borrowers Selling your assets means losing the potential upside value gain, triggering a capital gains tax event. By depositing your assets as collateral, you are able to obtain liquidity (working capital) without selling your assets, not incurring capital gains taxes. ## The Role of the Unlockd Account in Borrowing The process begins with your Unlockd Account, a unique feature that acts as the hub for all your transactional activities on the platform. When you're ready to borrow: 1. **Deposit Your RWAs**: Transfer one or multiple assets from eligible [tokenizing partners](/unlockd-at-a-glance/supported-rwas) into your Unlockd Account. This account, a multi-signature wallet, assesses the value of your assets, setting the stage for your borrowing capacity. 2. **Assessment and Valuation**: Unlockd's system instantly evaluates your assets, considering factors like market demand, rarity, and other intrinsic qualities. This valuation, in conjunction with the Loan-To-Value (LTV) calculations, determines how much you can borrow against these assets. To learn all the details, check the following section: {% content-ref url="/pages/hY5bGYJ1oWfei6bjLpi5" %} [Unlockd Account](/protocol-mechanics/unlockd-account) {% endcontent-ref %} {% hint style="success" %} Borrowing against your assets in Unlockd, rather than selling them, can offer significant tax advantages. This strategy allows you to access liquidity while potentially deferring capital gains taxes that would be incurred from an outright sale, optimizing your tax situation. {% endhint %} ## Bundle up to 100 RWAs in a single loan One of the standout features of Unlockd V2 is the ability to use multiple assets as collateral for a single loan. This flexibility allows you to maximize your borrowing power and diversify the risk associated with individual asset volatility. Learn more here: {% content-ref url="/pages/cHqtyVKDeqbaRReMlO0m" %} [Multi-Asset Collateral](/protocol-mechanics/multi-asset-collateral) {% endcontent-ref %} ## Initiating a Loan When it's time to borrow, the process is streamlined for ease and efficiency: * **Selecting Assets**: In the 'Borrow' section, choose the currency you wish to borrow against your asset. Currently only USDC is available to borrow. * **Determining Loan Amounts**: The platform guides you in setting the amount based on the collective value and LTV of your deposited assets. The innovative Dynamic LTV model calculates how much you can borrow against your assets. This model adapts to market conditions and the specific attributes of your asset, ensuring a borrowing limit that's both realistic and advantageous. {% content-ref url="/pages/o6gbQNoiDGjMduU2KRsU" %} [Dynamic Loan-To-Value](/protocol-mechanics/dynamic-loan-to-value) {% endcontent-ref %} ## Keeping Custody and Ownership Unlockd V2's 'Keep Custody & Ownership' feature ensures you retain full custody and ownership of your RWAs while they serve as collateral. This aids in complying with KYC regulations and maintaining transparent, verifiable ownership. You also retain access to your assets' utilities, such as token-gated events, on-chain activities, airdrops, and staking rewards. {% content-ref url="/pages/SYi9MrjG5zBmCdzMbOtR" %} [Keep Custody & Ownership](/protocol-mechanics/keep-custody-and-ownership) {% endcontent-ref %} ## Managing and Repaying Your Loan With no fixed repayment period, Unlockd offers unparalleled flexibility in loan management. You have to repay the loan in the same asset type, along with the accrued interest, at your convenience. For example, if you borrow 1000 USDC you will pay back 1000 USDC + interest accrued. While the supply and demand ratio of the asset influences borrowing rates, the primary driver is actually the utilization rate of available lending pools. As more assets are borrowed without corresponding deposits, the rate climbs due to increased demand on a limited resource. As long as your position is safe, you can borrow for an undefined period. However, as time passes, the accrued interest will grow, making your health factor decrease, which might result in your deposited assets becoming more likely to be liquidated. ## Avoid being liquidated Maintaining the health of your loan is crucial to avoid liquidation. Liquidation occurs when the value of your collateral falls below a certain threshold, known as the Health Factor. This typically happens due to market volatility or a decline in the value of your asset collateral. #### Monitoring the Health Factor * **Stay Informed**: Regularly monitor your Loan Health Factor within the Unlockd platform. A drop below the critical threshold indicates an increased risk of liquidation. * **Alerts and Notifications**: Set up notifications in the Unlockd system to receive alerts if your Loan Health Factor approaches dangerous levels. {% content-ref url="/pages/y4FGdFEgFoEE7PnhYrGX" %} [Notifications](/protocol-mechanics/notifications) {% endcontent-ref %} #### Proactive Loan Management Strategies * **Partial or Full Repayment**: One of the most direct ways to improve your Loan Health Factor is by repaying part or all of your loan. This reduces the outstanding amount and consequently improves the health of your loan. * **Adding Collateral**: You can deposit additional assets as collateral to bolster your Loan Health Factor. This is particularly effective if you have assets that have retained or increased in value. #### Understanding the Liquidation Process * **Borrower Grace Period**: In the event your loan becomes unhealthy, Unlockd provides a grace period for you to take action and rectify your loan status before the liquidation is actually executed. {% content-ref url="/pages/KnfGOWW1ePf0SXwAA2Oi" %} [Borrower Grace Period](/protocol-mechanics/liquidations/borrower-grace-period) {% endcontent-ref %} * **Liquidation Mechanics**: If liquidation is initiated, Unlockd employs a smart liquidation system designed to minimize asset loss, first with a Liquidation Auction in the Marketplace and, if necessary, using a third-party protocol known as a External Liquidation Gateway. {% content-ref url="/pages/J90JjSoo8zQTcRKhdhAO" %} [Liquidations](/protocol-mechanics/liquidations) {% endcontent-ref %} ## Full loan terms and characteristics {% content-ref url="/pages/qkwkvEjRsm4V9vcdNUvN" %} [Loan characteristics](/protocol-mechanics/loan-characteristics) {% endcontent-ref %}
# Liquidators As a liquidator on Unlockd, you play a vital role in upholding the stability and integrity of the lending ecosystem. When a borrower's collateral value dips below the minimum threshold, triggering liquidation, your job is to strategically participate in the process to acquire discounted assets while also ensuring lenders are protected. ## Monitoring Loans and Identifying Opportunities * **Check Loan List:** Regularly monitor the list of active loans sorted by health factor. Focus on those nearing or below the critical 1.0 threshold, as they present liquidation opportunities. * **Custom Alerts**: Set up notifications for specific loan health factor milestones. When a loan you're tracking falls below a particular level, you'll get an alert so you can take swift action. * **Analyze Collateral**: Scrutinize the collateral assets of at-risk loans. Estimate their value based on current market conditions and intrinsic traits like rarity. This allows you to strategize your bids effectively during liquidation. * **Timing:** Closely follow market trends, major events, and protocol changes that could impact asset values. Liquidity events often present increased liquidation opportunities. {% content-ref url="/pages/y4FGdFEgFoEE7PnhYrGX" %} [Notifications](/protocol-mechanics/notifications) {% endcontent-ref %} {% hint style="warning" %} Major market volatility can decrease collateral values, so liquidations carry inherent risks. Moderate position sizes accordingly. {% endhint %} ## Participating in Liquidation Auctions * **Bid Strategizing**: Determine your auction bids based on current collateral valuations and the starting bid, which is either the appraisal or the Critical Recovery Threshold (CRT). * **Bid Now, Pay Later:** Utilize this feature to bid on collateral RWAs without fully paying upfront. The RWAs become collateral for a new loan issued by Unlockd. * **Binding Bids**: Understand that your bids are binding on-chain transactions, ensuring auction integrity. The bid amount goes directly to debt reduction. * **Monitor Auction Dynamics**: Follow the auction closely as it progresses. Higher bids repay earlier bidders and further reduce outstanding debt. * **Incentive Rewards**: If your bid gets outbid, you receive a 2.5% reward on the bid amount for initiating the auction. {% content-ref url="/pages/uk9Z5hZH216SwbxIN7su" %} [Liquidation Process](/protocol-mechanics/liquidations/liquidation-process) {% endcontent-ref %} {% content-ref url="/pages/66amzzWhoCbgPdRF4DXt" %} [Bid Now, Pay Later](/protocol-mechanics/marketplace/bid-now-pay-later) {% endcontent-ref %} ## Managing Liquidated Assets * **Claiming assets**: After winning an auction, manually claim the assets. This transfers ownership to you. * **Timing Liquidations**: Consider market conditions and optimal timing when liquidating acquired assets to maximize profits. * **Capitalize on Discounts:** If you can sell liquidated assets above the purchase price, you profit from the discount acquired at auction. {% hint style="info" %} If auctions yield insufficient bids, Unlockd utilizes external liquidators to recover debts while minimizing losses, only for those assets with no bids. {% endhint %} # Ecosystem # Infrastructure ## Appraisal Data Providers Refer to our dedicated Collateral Valuation documentation to learn about our data infrastructure, third-party providers and their appraisal algorithms. {% content-ref url="/pages/I4BX9OZUmS27tuOivCMD" %} [Collateral Valuation](/protocol-mechanics/collateral-valuation) {% endcontent-ref %} ## Reservoir Reservoir is open infrastructure for trading NFTs and RWAs across major marketplaces and chains. It includes a universal router for creating and executing NFT and RWA liquidity across major marketplaces and within the Reservoir ecosystem. Reservoir provides Unlockd with a modular set of tools that let us to interact with the NFT market at the appropriate level of abstraction for our application, enabling seamless liquidation options in the following marketplaces: 1. opensea.io 2. looksrare.org 3. x2y2.io 4. sudoswap.xyz 5. nft.coinbase.com 6. rarible.com 7. nftx.io 8. foundation.app 9. manifold.xyz 10. zora.co 11. blur.io 12. cryptopunks.app 13. element.market 14. infinity.xyz 15. universe.xyz 16. sansa.xyz 17. ens.vision 18. magically.gg 19. alienswap.xyz 20. sound.xyz 21. atomic0.com 22. rare.id 23. parcel.so 24. metahood.xyz 25. reservoir.market 26. tessera.co ## hashmail hashmail is like Twilio for web3. They help dApps send personalized email communications (updates, alerts, rewards, billing, and reminder emails) to users’ wallet addresses. They deliver these communications across multiple channels — their web/mobile inbox, Telegram, web2 email, and Discord. hashmail allows Unlockd to notify Borrowers when their [Health Factors](/protocol-mechanics/liquidations/health-factor) drop from key levels and notify users and the community when a loan needs to be [liquidated](/protocol-mechanics/liquidations/liquidation-process) and there are active auctions to bid. These notifications are both on-chain and off-chain. ## Push Protocol Push enables cross-chain notifications & messaging for dApps, wallets, users & more. Push allows Unlockd to notify Borrowers when their [Health Factors](/protocol-mechanics/liquidations/health-factor) drop from key levels and notify users and the community when a loan needs to be [liquidated](/protocol-mechanics/liquidations/liquidation-process) and there are active auctions to bid. These notifications are both on-chain and off-chain. ## Nexus Mutual Nexus Mutual is a people-powered alternative to insurance that uses the power of Ethereum so people can share risks together without needing an insurance company. Nexus Mutual allows Unlockd to offer our users the possibility of securing risk and potential bugs in smart contract code and covering events like hacks or multi-sig wallet issues. {% hint style="warning" %} This integration is expected to be deployed with Unlockd V2 in the upcoming months. {% endhint %} ## Spectral Finance Spectral Finance creates a programmable creditworthiness ecosystem facilitating capital efficiency on-chain through credit risk analysis. Spectral Finance allows Unlockd to get insight into the Non-Fungible Credit Score of Borrowers and offer them special financial opportunities adapted to their on-chain reputation. {% hint style="warning" %} This integration is expected to be deployed with Unlockd V2 in the upcoming months. {% endhint %} # Investors Unlockd has raised a **US$4.4M seed round + US$1M bridge round** to unlock the full liquidity and utility of the digital asset economy. Despite having increased both the capital to be raised and the valuation, we are proud to say that Unlockd received offers oversubscribing for more than 3x. This funding comes from some of the most reputable firms and angel investors in the industry: * Blockchain Capital (LEAD) * Sfermion * Spartan Group * Play Ventures * IDEO CoLab * Bitscale * Sanctor Capital * Emoote * Jets Capital * Eden Ventures * Caballeros Capital * Emfarsis * Crypto Plaza * YGG (Yield Guild Games) * YGG SEA * BREEDER DAO * Blockchain Space * Gabby Dizon (YGG Founder) * Colin Goltra (YGG COO and NFT collector) * Peter Ing (BlockchainSpace Founder) * Renz Chong (BreederDAO Co-Founder) There is interest in our product, and we are turning our vision into a working protocol backed by many of the best investors in the industry. > “Unlockd is the missing piece on-chain debt markets need to evolve to their optimal state with a size equivalent to traditional finance. Enabling the use of Real-World Assets, both physical and financial, as collateral is an industry game-changer that will bring to DeFi both institutional and mainstream retail investment.” — Jorge Schnura, Unlockd Co-Founder ## Meet our investors **Blockchain Capital (LEAD)** Blockchain Capital is a leading venture firm in the blockchain industry. In the last 8 years, they have made over 125 investments in companies and protocols in the sector, across different stages, geographies and asset types. Blockchain Capital leads this seed round of Unlockd. **Sfermion** Founded in 2019, Sfermion is an investment firm focused on the metaverse. Their goal is to accelerate the emergence of the metaverse by investing in the founders, companies, and protocols creating the infrastructure and environments that will form the foundations of our digital future. **Spartan Group** Spartan Capital is a digital asset management firm that takes a fundamental approach to identifying unique investment opportunities in the emergent crypto asset class. Their investment team has over 20 years of experience in investment research and capital management for top-tier firms such as Goldman Sachs and Indus Capital. **Play Ventures** Play Ventures is the leading early-stage VC fund investing in gaming and gaming services startups around the world. The fund was founded in 2018 by former gaming entrepreneurs Henric Suuronen and Harri Manninen. **IDEO CoLab** IDEO CoLab Ventures invests in early-stage distributed web startups and co-creates with them to ship new products and protocols. CoLab works across industries at the intersection of emerging tech, societal systems, and human needs. **Bitscale** Bitscale invests in teams and solutions that bring transparency and efficiency to our world with cutting-edge technologies. They also help with investors relations, community building — by increasing awareness and brand exposure in Russia/CIS as well as in Asia — and post-launch support and advisory. **Sanctor Capital** Sanctor Capital is a thesis-driven investment fund and deploys capital across both primary and secondary markets. As founders and crypto natives themselves, they understand the challenges faced by early-stage projects and provide active investor-side support through mentorship and network integration. **Emoote** Emoote is a venture capital firm dedicated to fostering innovation and growth in the Web3 and digital entertainment sectors. Led by a team of seasoned professionals, Emoote brings a wealth of experience from various industries, including digital entertainment, blockchain technology, and venture investing. **Jets Capital** Jets.Capital supports crypto and Web3 startups at initial stages. Their mission is to help modern technologies to smoothly enter our lives and change the world for the better. They provide a holistic ecosystem for startups to grow and have partners to take care of all aspects - be it advertising, legal, promotion, listings, go-to-market expertise and more. **Ed3n Ventures** Ed3n Ventures is a leading web3 venture studio, dedicated to building projects that enable the open metaverse. They work with founders to provide expertise, funding, and access to Eden’s strategic network of advisors and partners. Aside from their web 3.0 ventures, Ed3n has also been actively building and growing a portfolio of e-commerce and tech startups in Southeast Asia over the past decade. **Caballeros Capital** Caballeros Capital is a private investment firm focused on investing in the blockchain innovation space. **Emfarsis** Emfarsis is an advisory and investment firm based in Asia Pacific focused on crypto, NFTs, open Metaverse and Web3 innovation for social impact. Whether it is international expansion or moving into the metaverse, they splice economic data with real-life human stories to help identify the market opportunity. **Crypto Plaza** Crypto Plaza is the largest crypto economy hub in Southern Europe. Based in Spain, it is a community of the leading companies, startups and investors in the sector. They are a worldwide reference in the Crypto Assets and Blockchain space, and lead the Spanish-speaking and Southern European market. **YGG (Yield Guild Games)** YGG is the world’s leading Play-To-Earn guild that brings players together to earn via NFT games. They are the settlers of the Metaverse and invest in GameFi-related projects. **YGG SEA** YGG SEA is the first subDAO of Yield Guild Games, with the mission of creating the biggest and most sustainable play-to-earn virtual economy in Southeast Asia. **BreederDAO** BreederDAO is the NFT asset factory of blockchain games. They provide high-volume asset production, tailored to specification, for some of the largest guilds in the Metaverse so they can supercharge their play-to-earn economies. **BlockchainSpace** BlockchainSpace is a guild hub for play-to-earn communities, with end to end solutions including CRM, Guild Data Analytics and Guild Financial Bank. **Notable angel investors** * Gabby Dizon (YGG Founder) * Colin Goltra (YGG COO and NFT collector) * Peter Ing (BlockchainSpace Founder) * Renz Chong (BreederDAO Co-Founder) ####
####
# How to use the Testnet V2
1. Head to sepolia.unlockd.finance [sepolia.unlockd.finance](#id-1.-head-to-sepolia.unlockd.finance)
2. Access the Faucet tab and connect your wallet. Accept and Sign the ToS. ![](/files/ZqYjoHpIBERPyPvfnfPl) ![](/files/oZaHIfi9V9ouJELzUQLv)
3. Get some Sepolia ETH from the faucet of your choice. [https://sepoliafaucet.com/\ https://www.infura.io/faucet/sepolia]() Access these sites and follow their steps to get free Sepolia ETH. Unlockd is not associated with any of these services.
4. Get some Sepolia USDC from the AAVE faucet.
5. Get up to 4 Testnet RWAs from the Unlockd Faucet Select the collection to mint. Hit 'Send me NFTs'. You can get RWAs from both mockup collections, up to 2 assets per collection. Hit MINT and pay a bit of Sepolia ETH in gas. Now you have mockup ETH and RWAs to start using the Unlockd V2 Testnet. ![](/files/0co3jjYFiCS0OKsOdU5l)
The next sections of the documentation teach you how to use every feature and functionality of Unlockd V2. # Getting started Here, you'll find comprehensive user guides designed to navigate you through Unlockd's ecosystem, whether you're a first-time visitor or a seasoned user looking to explore new features. From connecting your wallet to exploring the Dashboard, Earn, Borrow, and Marketplace sections, these guides serve as your roadmap to understanding and utilizing Unlockd effectively.
🗺️ User Guides Reference #### [Getting Started](/user-guides/getting-started#how-things-are-organized-in-unlockd) * How things are organized in Unlockd * Connect your Wallet * Navigate the Dashboard #### [How to lend and earn APY](/user-guides/how-to-supply-and-earn-apy) * Getting Started with the Earn Section * Deposit to a Pool * Withdraw from a Pool #### [How to open an Unlockd Account](/user-guides/how-to-create-an-unlockd-account) * Create your Unlockd Account * Ready to Borrow? Next Step #### [How to take an instant loan](/user-guides/how-to-take-an-instant-loan) * Create your Unlockd Account * **Fu**nd Your Unlockd Account * Take an Instant Loan with one or more RWAs as collateral #### [How to manage your Loan](/user-guides/how-to-take-an-instant-loan/how-to-manage-your-loan) * Access Loan Details * Add RWAs to your Loan's Collateral * Remove RWAs from your Loan's Collateral * Borrow more on your active Loan * Repay partially or totally your Loan * Sell instantly an RWA from your Loan's Collateral at Market Value * List an RWA from your Loan's Collateral at a Fixed Price in the Unlockd Marketplace * Auction an RWA from your Loan's Collateral in the Unlockd Marketplace #### [How to settle your Loan](/user-guides/how-to-take-an-instant-loan/how-to-settle-your-loan) #### [How to navigate the Marketplace](/user-guides/how-to-navigate-the-marketplace) * 'Buy Now' tab * Check the details of an asset in the 'Buy Now' tab * Bid on Auctions or Instantly Buy RWAs in the 'Buy Now' tab * 'Active Loans' tab * Transaction History' tab * 'My Activity' tab #### [How to bid/buy an asset](/user-guides/how-to-bid-buy-an-asset) * Buy Instantly at Full Price * Buy Instantly, Finance with Loan (Buy Now, Pay Later) * Bid in an Auction at Full Price * Bid Now Pay Later (Part Downpayment, Part Loan) * Claim an RWA from a Full-Price Bid Win in an Auction * Claim an RWA from a Bid-Now-Pay-Later Win in an Auction #### [How to auction/list/sell an asset](/user-guides/how-to-auction-list-sell-an-asset) * Sell instantly an RWA from your Loan's Collateral at Market Value * List an RWA from your Loan's Collateral at a Fixed Price in the Unlockd Marketplace * Auction an RWA from your Loan's Collateral in the Unlockd Marketplace * Auction and set a Buyout Price for an RWA from your Loan's Collateral in the Unlockd Marketplace #### [How to enable Notifications](/user-guides/how-to-enable-notifications)
***
Start here At the top of your screen, you'll find the navigation bar, your gateway to the core sections of Unlockd: * **Dashboard**: Your home base. Get a snapshot of the latest protocol metrics and your personal activity. * **Earn**: Discover how you can supply liquidity to the protocol and earn rewards. * **Borrow**: Explore borrowing options using RWAs and other RWAs as collateral. * **Marketplace**: Dive into the bustling marketplace for buying, bidding on, or listing RWAs. Additionally, stay connected and informed with links to **Follow us on Twitter**, **Join our Discord**, and enable **Notifications** to never miss an update.
Connect your Wallet The heart of your Unlockd experience begins with **Connect Wallet**. This is your entry point: 1. Click **Connect Wallet** to start. 2. Choose your preferred wallet provider. 3. Follow the on-screen instructions to connect your wallet. 4. Agree to Unlockd's Terms of Service by signing a gasless message.
Navigate the Dashboard The Dashboard is where the pulse of the Unlockd protocol is at your fingertips: * **Protocol Metrics**: View real-time data, including total liquidity supplied, total assets collateralized, their value, and the current Utilization Rate—showcasing the active portion of liquidity pools in loans. * **Personal Sections**: * **My Loans**: Track your active and past loans. * **My Earnings**: Monitor your earnings from supplying liquidity. * **My Auctions**: Keep an eye on auctions you're participating in, whether you're selling or bidding. * **Explore Collections and RWAs**: A comprehensive look at all collections, RWAs, their values, and valuations within Unlockd. Perfect for spotting trends or finding your next investment.
*** {% hint style="info" %} Screenshots in these guides are mock-ups and may differ from the live platform, particularly in text details. The Unlockd team regularly updates guides to reflect UX improvements. {% endhint %} # How to supply and earn APY Unlockd offers a straightforward way to earn yields **directly in USDC** by lending your assets. Below, you'll find a step-by-step guide divided into three key sections to get you started, make deposits, and withdraw your earnings.
Getting Started with the Earn Section 1. **Navigate to Earn**: This is your gateway to viewing available assets for deposit. Each asset operates within its own pool, featuring unique metrics such as Estimated APY, Total Value Locked (TVL), Amount Deposited, and your Wallet Balance. 2. **Interact**: You have the option to either **Deposit** or **Withdraw** assets directly from this screen.
Deposit to a Pool 1. **Start depositing**: Identify the USDC pool and click **Deposit**. You'll be taken to a detailed screen showing the APY for the selected asset. 2. **Approval (First-time Only)**: For first-time deposits of a particular asset, click **Approve** to enable token spending from your wallet. You'll need to sign a transaction to confirm this action. 3. **Making a Deposit**: * Enter the amount you wish to supply. For convenience, use the **MAX** button to deposit all available funds. * Click **Supply** to proceed. * Confirm the transaction in your wallet and cover the necessary gas fees. 4. **Confirmation**: Upon successful transaction, you'll receive a confirmation message, and your dashboard will update to reflect the new balance. *Note that your yields on Unlockd can grow exponentially over time due to our auto-compounding feature. When you earn yields, we automatically reinvest them into the pool, increasing your deposited balance and potentially boosting your returns without any additional action required from you.*
Withdraw from a Pool The process for withdrawal mirrors that of making a deposit: 1. **Choose Withdraw**: From the Earn section, select the USDC pool you wish to withdraw assets from and click **Withdraw**. 2. **Specify Amount**: Enter the amount you wish to withdraw. Utilize the **MAX** button if you wish to withdraw all deposited assets. 3. **Withdraw**: Confirm your withdrawal by clicking **Withdraw**, then approve the transaction in your wallet and pay any associated gas fees. 4. **Completion**: A confirmation message will indicate your successful withdrawal, and your dashboard will be updated accordingly.
*** ### Related documentation {% content-ref url="/pages/gmK6CQ61q7JyRQ3GapaO" %} [Lenders](/unlockd-at-a-glance/lenders) {% endcontent-ref %} {% content-ref url="/pages/pOpqTLKY43svt2oWTdvS" %} [Liquidity Pools](/protocol-mechanics/liquidity-pools) {% endcontent-ref %} {% content-ref url="/pages/V91Jufekoai8mQxhSLCF" %} [Risk](/risk/risks-of-using-unlockd) {% endcontent-ref %} *** {% hint style="info" %} Screenshots in these guides are mock-ups and may differ from the live platform, particularly in text details. The Unlockd team regularly updates guides to reflect UX improvements. {% endhint %} # How to create an Unlockd Account Before diving into borrowing or engaging in any debt-related activities on Unlockd, establishing your Unlockd Account is essential. This account is your hub for depositing RWAs, creating and managing loans, and monitoring your digital assets. Here's how to get started:
Create your Unlockd Account 1. **Navigate to Borrow**: If you haven't set up an Unlockd Account, selecting "Borrow" or any debt-related action prompts you with "Create your Unlockd Account." 2. **Accept ToS**: You'll first need to accept the Terms of Service (ToS) and sign them digitally. This step is crucial and ensures you're informed about the platform's policies. 3. **Confirm Account Creation**: Finalize your account setup by confirming a blockchain transaction. This action requires a small gas fee.
Ready to Borrow? Next Steps With your Unlockd Account now active, you're set to deposit RWAs, create loans, and manage your assets all in one place. Head over to [our detailed guide on borrowing using your Unlockd Account ](/user-guides/how-to-take-an-instant-loan)for step-by-step instructions on securing loans with your RWAs.
*** ### Related documentation {% content-ref url="/pages/hY5bGYJ1oWfei6bjLpi5" %} [Unlockd Account](/protocol-mechanics/unlockd-account) {% endcontent-ref %} {% content-ref url="/pages/SYi9MrjG5zBmCdzMbOtR" %} [Keep Custody & Ownership](/protocol-mechanics/keep-custody-and-ownership) {% endcontent-ref %} *** {% hint style="info" %} Screenshots in these guides are mock-ups and may differ from the live platform, particularly in text details. The Unlockd team regularly updates guides to reflect UX improvements. {% endhint %} # How to take an instant loan Unlockd simplifies the process of leveraging your RWAs for instant liquidity without selling them. This guide walks you through creating your Unlockd Account, depositing RWAs, and securing a loan with straightforward, step-by-step instructions.
Create your Unlockd Account Before taking an instant loan, ensure you've created your Unlockd Account. If you haven't done this yet, please refer to our [How to Create Your Unlockd Account Tutorial](/user-guides/how-to-create-an-unlockd-account) for a step-by-step guide.
Fund Your Unlockd Account 1. **Accessing the Borrow UI**: Once your Unlockd Account is set up, navigate to the Borrow section. You'll find sections for "My Available RWAs" and "My Active Loans," likely empty for new users. 2. **Deposit** RWAs: You'll see a prompt, "No RWAs in your Unlockd Account yet. Deposit from your personal wallet to start borrowing," accompanied by a "FUND UNLOCKD ACCOUNT" button. Note: If you don't own any supported RWAs, acquire some first. On testnets, free RWAs may be available via a Faucet. 3. **Select** RWAs **for Deposit**: If you have supported RWAs in your wallet, they'll be displayed along with details like valuation, available borrowing amount, and current interest rates. Select the RWAs you wish to deposit. You can remove any selected RWAs by clicking the "X" on its image. When ready, hit 'Fund Unlockd Account'. 4. **One-Time-Approval for Collections**: For each selected RWA's collection, complete a one-time approval process. This avoids the need to approve each RWA individually. 5. **Finalize Transfer**: After approvals, sign the final transaction to move your RWAs from your personal wallet to your Unlockd Account. Successful transfer updates the "My Available RWAs" section, enabling the "Start Borrowing" button.
Take an Instant Loan with one or more RWAs as collateral **Hit "Start Borrowing"** Upon selecting "Start Borrowing," you'll enter the loan creation interface. This process allows you to use your RWAs for instant loans. **Add RWAs to Collateral** * **Select Your RWAs**: Your supported RWAs already deposited to your Unlockd Account are displayed for easy selection. Click on an RWA to add it to your collateral; click again to remove it. * **Experiment with Combinations**: Feel free to explore different collateral combinations. The interface dynamically updates to show the total valuation and available borrowing amount based on your collateral selection. **Customize Your Loan** * **Set the Borrow Amount**: Enter the desired loan amount or select "MAX" to borrow the maximum based on your collateral's value. * **Monitor Loan Metrics**: Watch how changes in the borrow amount affect the liquidation price and your loan's health factor. These metrics are crucial for understanding the safety and terms of your loan. **Finalize the Loan** * **Create Your Loan**: Once you're satisfied with the loan conditions (collateral and amount), click "Create Loan." Remember to check the Interest APR before commiting. * **Confirm the Transaction**: A blockchain transaction will be initiated. Review and confirm this transaction, which will require a small gas fee. **Loan Activation** * **Success**: After confirming the transaction, your loan is activated immediately. You'll see updated details in "My Loans" on the dashboard, reflecting your new borrowing status. Your funds will arrive immediately to your personal wallet, not to your Unlockd Account, for your convenience.
*** ### Related documentation {% content-ref url="/pages/rhmySUob1WoMPRJf7Cq1" %} [Borrowers](/unlockd-at-a-glance/borrowers) {% endcontent-ref %} {% content-ref url="/pages/qkwkvEjRsm4V9vcdNUvN" %} [Loan characteristics](/protocol-mechanics/loan-characteristics) {% endcontent-ref %} {% content-ref url="/pages/I4BX9OZUmS27tuOivCMD" %} [Collateral Valuation](/protocol-mechanics/collateral-valuation) {% endcontent-ref %} {% content-ref url="/pages/cHqtyVKDeqbaRReMlO0m" %} [Multi-Asset Collateral](/protocol-mechanics/multi-asset-collateral) {% endcontent-ref %} {% content-ref url="/pages/o6gbQNoiDGjMduU2KRsU" %} [Dynamic Loan-To-Value](/protocol-mechanics/dynamic-loan-to-value) {% endcontent-ref %} {% content-ref url="/pages/SYi9MrjG5zBmCdzMbOtR" %} [Keep Custody & Ownership](/protocol-mechanics/keep-custody-and-ownership) {% endcontent-ref %} {% content-ref url="/pages/J90JjSoo8zQTcRKhdhAO" %} [Liquidations](/protocol-mechanics/liquidations) {% endcontent-ref %} *** {% hint style="info" %} Screenshots in these guides are mock-ups and may differ from the live platform, particularly in text details. The Unlockd team regularly updates guides to reflect UX improvements. {% endhint %} # How to manage your loan Once you've taken out a loan against your RWAs with Unlockd, managing it is crucial for maintaining your financial health within the protocol. This section provides detailed guidance on viewing loan details, adding or removing RWAs from collateral, borrowing more, and repaying your loan.
Access Loan Details 1. **Go to "My Active Loans"**: Your active loan appears under this section. 2. **Expand for Details**: Click on a loan to see details of each RWA collateral. **Key Metrics Explained:** * **Valuations**: Total and individual RWA valuations give insights into the collateral's worth. * **Liquidation Price**: Shows the market value threshold for potential liquidation. * **Health Factor**: Indicates the loan's safety margin; higher is better. * **Borrowed Amount & Available to Borrow**: Reflects the current borrowed sum and additional borrowing capacity. *Metrics for multi-Asset collateral loans are aggregated due to the collective nature of the collateral. This approach simplifies the management and understanding of the loan's overall health and risk level, focusing on the combined strength of your* RWAs *rather than individual pieces.*
Add RWAs to your Loan's Collateral This process allows you to RWAs to your collateral. 1. **Navigate to Your Loan**: Find the loan you wish to adjust and click "Manage Loan." 2. **Choose "Add assets"**: This option will present you with the RWAs supported. 3. **Finalize Addition**: After making your selections and adjustments, click "Add." 4. **Transaction Approval**: Confirm and approve the transaction in your wallet.
Remove RWAs from your Loan's Collateral This process allows you to adjust your collateral according to your current needs while ensuring your loan remains in good standing within the Unlockd ecosystem. 1. **Navigate to Your Loan**: Find the loan you wish to adjust and click "Manage Loan." 2. **Choose "Remove assets"**: This option will present you with the RWAs currently serving as collateral. 3. **Maintaining Health Factor**: Ensure your loan's Health Factor remains above 1. To facilitate this: * **Repayment Option**: A field is available for specifying an amount you wish to repay, helping to mitigate the impact on your Health Factor. 4. **Finalize Removal**: After making your selections and adjustments, click "Remove." 5. **Transaction Approval**: Confirm and approve the transaction in your wallet. Successfully removed RWAs will be returned to your Unlockd Account, ready for future use.
Borrow more on your active Loan This feature offers flexibility to increase your loan amount, provided your loan's health remains robust, allowing for immediate access to additional funds when needed. **Starting the Process:** 1. **Access Your Loan**: Locate the loan you're interested in and select "Manage Loan." 2. **Select "Borrow More"**: This action opens a modal for additional borrowing. **Eligibility and Input:** * **Health Factor Check**: Ensure your Health Factor is comfortably above 1 to proceed. If it's below or dangerously close to 1, borrowing more won't be possible. * **Specify Amount**: Enter the desired additional amount. Watch as the Health Factor, liquidation price, and other relevant metrics adjust in real-time with your input. Displayed details include the loan's total valuation, current liquidation price, amount already borrowed, and the total available for borrowing. **Completing the Borrowing:** * **Initiate Loan Extension**: After setting the amount, click "Borrow." * **Transaction Confirmation**: Approve the transaction in your wallet, including the necessary gas fee. * **Funds Transfer**: The borrowed funds will be transferred directly to your personal wallet, not your Unlockd Account.
Repay partially or totally your Loan **Navigating to Repay:** 1. **Locate Your Loan**: In the "Borrow" section, find the loan you wish to manage. 2. **Access "Manage Loan"**: Click on it, then select "Repay" to open the repayment modal. **Repayment Details:** * **Penalty for Low Health Factor**: If repaying to prevent liquidation due to a Health Factor (HF) below 1, note there's a penalty fee. * **Minimum Repayment**: The modal displays a "Min to pay" amount, which is the minimum required to lift your HF back above 1. * **Flexible Repayment**: Apart from the minimum to prevent liquidation, you're free to choose partial repayment to improve your HF or full repayment to close the loan and return RWAs to your Unlockd Account. **Repayment Process:** 1. **Repayment Asset**: Ensure you repay with the same asset type you borrowed. 2. **Initiate Repayment**: Enter your desired repayment amount, then click "Repay." 3. **Transaction Confirmation**: Approve the transaction in your wallet, covering any necessary gas fees. **Completion:** Upon successful repayment, your loan's HF will adjust accordingly. For full repayments, the loan closes, and collateral RWAs are transferred back to your Unlockd Account, marking the loan as settled.
Sell instantly an RWA from your Loan's Collateral at Market Value Please, refer to our step-by guide to [selling, listing or auctioning assets](/user-guides/how-to-auction-list-sell-an-asset).
List an RWA from your Loan's Collateral at a Fixed Price in the Unlockd Marketplace Please, refer to our step-by guide to [selling, listing or auctioning assets](/user-guides/how-to-auction-list-sell-an-asset).
Auction an RWA from your Loan's Collateral in the Unlockd Marketplace Please, refer to our step-by guide to [selling, listing or auctioning assets](/user-guides/how-to-auction-list-sell-an-asset).
*** ### Related documentation {% content-ref url="/pages/rhmySUob1WoMPRJf7Cq1" %} [Borrowers](/unlockd-at-a-glance/borrowers) {% endcontent-ref %} {% content-ref url="/pages/qkwkvEjRsm4V9vcdNUvN" %} [Loan characteristics](/protocol-mechanics/loan-characteristics) {% endcontent-ref %} {% content-ref url="/pages/J1ZURQjX1f2FGbdmmEv9" %} [Health Factor](/protocol-mechanics/liquidations/health-factor) {% endcontent-ref %} {% content-ref url="/pages/I4BX9OZUmS27tuOivCMD" %} [Collateral Valuation](/protocol-mechanics/collateral-valuation) {% endcontent-ref %} {% content-ref url="/pages/cHqtyVKDeqbaRReMlO0m" %} [Multi-Asset Collateral](/protocol-mechanics/multi-asset-collateral) {% endcontent-ref %} {% content-ref url="/pages/o6gbQNoiDGjMduU2KRsU" %} [Dynamic Loan-To-Value](/protocol-mechanics/dynamic-loan-to-value) {% endcontent-ref %} {% content-ref url="/pages/SYi9MrjG5zBmCdzMbOtR" %} [Keep Custody & Ownership](/protocol-mechanics/keep-custody-and-ownership) {% endcontent-ref %} {% content-ref url="/pages/J90JjSoo8zQTcRKhdhAO" %} [Liquidations](/protocol-mechanics/liquidations) {% endcontent-ref %} {% content-ref url="/pages/9h8RRjKNs0iGFVSJ05Jf" %} [How to manage your loan](/user-guides/how-to-take-an-instant-loan/how-to-manage-your-loan) {% endcontent-ref %} *** {% hint style="info" %} Screenshots in these guides are mock-ups and may differ from the live platform, particularly in text details. The Unlockd team regularly updates guides to reflect UX improvements. {% endhint %} # How to settle your loan Please, refer to our step-by-step guide to [Repaying partially or totally your Loan](/user-guides/how-to-take-an-instant-loan/how-to-manage-your-loan#repaying-partially-or-totally-your-loan). # How to navigate the Marketplace Unlockd's Marketplace is your gateway to buying, selling, and bidding on RWAs. From instant purchases to participating in auctions, this guide offers insights into exploring listings, understanding auction mechanics, and making informed decisions.
'Buy Now' tab Discover a diverse array of assets in a marketplace format. Each listing provides essential details like the asset type name, token ID, and valuation. Auctioned assets display the current bid and countdown. Utilize filters and sorting options for an optimized browsing experience. Here, you can instantly purchase assets, participate in auctions, or secure assets from liquidation sales. The "Buy Now" button indicates the price for immediate acquisition.
Check the details of an asset in the 'Buy Now' tab Clicking on an asset card (excluding buttons) in the Buy RWAs tab reveals in-depth details. This section offers a comprehensive look at the RWA's attributes, bid history, and listing/auction specifics (valuation, highest bid, available borrowing amount, and auction timer). It also provides straightforward options for bidding or immediate purchase.
Bid on Auctions or Instantly Buy RWAs in the 'Buy Now' tab Please, refer to our step-by-step guide, [How to bid/buy an asset](/user-guides/how-to-bid-buy-an-asset).
'Active Loans' tab A list of active loans, organized by ascending Health Factor, helps you identify assets nearing liquidation. This feature is key for spotting potential bidding opportunities. Select "See More" to expand the list.
'Transaction History' tab Explore a comprehensive log of all marketplace transactions. This tab provides a window into the vibrant activity within the platform, offering insights into buying, selling, and bidding dynamics. "See More" extends the list for deeper exploration.
'My Activity' tab Your personalized transaction history, including bids, purchases, listings, and sales, is displayed here. Stay updated on auction outcomes with real-time status reports. For winning bids, a convenient "Claim" button facilitates easy acquisition of RWAs. Expand the list with "See More" for a full overview of your marketplace interactions.
*** ### Related documentation {% content-ref url="/pages/VleFIbNSssFuGekrVqzw" %} [Liquidators](/unlockd-at-a-glance/liquidators) {% endcontent-ref %} {% content-ref url="/pages/RxpGCT5kpmm9KptEV9TZ" %} [Marketplace](/protocol-mechanics/marketplace) {% endcontent-ref %} {% content-ref url="/pages/J90JjSoo8zQTcRKhdhAO" %} [Liquidations](/protocol-mechanics/liquidations) {% endcontent-ref %} *** {% hint style="info" %} Screenshots in these guides are mock-ups and may differ from the live platform, particularly in text details. The Unlockd team regularly updates guides to reflect UX improvements. {% endhint %} # How to bid/buy an asset Unlockd's Marketplace offers a streamlined process for acquiring assets, whether through immediate purchase or by participating in auctions. You can opt for a direct buy at a fixed price, bid in an auction, or secure an asset instantly with a fixed buyout price while financing it with a loan. Here's a step-by-step guide on how to navigate these options:
Buy Instantly at Full Price 1. **Start the Process**: Navigate to the asset you're interested in on the Marketplace and click the "Buy Now" button, which displays the item's fixed price. 2. **Choose Wallet Destination**: A modal appears where you can choose to transfer the RWA directly to your personal wallet or your Unlockd Account. If you plan to use the RWA as collateral for a future loan, sending it to your Unlockd Account saves you a step. * **Note**: If you haven’t yet created an Unlockd Account, you’ll be prompted to do so. Refer to [Creating Your Unlockd Account](/user-guides/how-to-create-an-unlockd-account) for a step-by-step guide. 3. **Complete the Purchase**: Confirm your selection, sign the transaction, and pay the necessary gas fee. The RWA is now yours.
Buy Instantly, Finance with Loan (Buy Now, Pay Later) 1. **Start the Process**: Navigate to the asset you're interested in on the Marketplace and click the "Buy Now" button, which displays the item's fixed price. 2. **Select Financing Option**: In the "Buy Now" modal, choose "Finance with Loan" to split the payment between a downpayment and an instant loan. 3. **Configure Your Loan**: Adjust the downpayment to dynamically update loan details like liquidation price, health factor, and remaining debt. This helps you understand the loan's terms before committing. 4. **Finalize Purchase**: Confirm your downpayment and loan details, sign the transaction, and the RWA is purchased with these terms. 5. **Monitor your Loan**: A new loan has been created, and you will need to meet its obligations to be able to withdraw the asset.
Bid in an Auction at Full Price 1. **Place Your Bid**: Click "Place Bid" on an auctioned asset. 2. **Commit Your Bid**: Enter an amount higher than the current bid. Your funds are locked in as soon as you place the bid. 3. **Follow the Auction**: If outbid, your funds are promptly returned. Stay updated on the auction's progress directly within the platform.
Bid Now Pay Later (Part Downpayment, Part Loan) 1. **Place Your Bid**: Click "Place Bid" on an auctioned asset. You'll need an Unlockd Account for this step. * **Note**: If you haven't created an Unlockd Account, a prompt will guide you through the setup. Check [Creating Your Unlockd Account](/user-guides/how-to-create-an-unlockd-account) for detailed instructions. 2. **Initiate a Financed Bid**: For the "Bid Now Pay Later" option, specify your bid and how much you're putting down upfront. The rest will be covered by an instant loan if your bid wins. 3. **Detail Your Bid and Downpayment**: Enter the total bid and downpayment amounts. The interface will show real-time updates on how this affects your potential loan. 4. **Secure Your Bid with Financing**: After setting your bid and downpayment, a transaction confirmation is needed. If successful, the downpayment is processed, and the remainder is covered by a loan from Unlockd.
Claim an RWA from a Full-Price Bid Win in an Auction 1. **Locate the RWA**: * **Via Buy Now Section**: Navigate to the Buy Now tab in the Marketplace. Find your won item; the only available action will be to "Claim" it. * **Via My Activity**: Alternatively, access the "My Activity" tab where your successful bid is listed. The "Claim" option will be readily available next to the relevant item. 2. **Complete the Claim**: Clicking "Claim" prompts a transaction for you to sign and includes a gas fee. Upon confirmation, the RWA is transferred to your Unlockd Account. This process ensures that the asset is immediately available for you or for initiating loans.
Claim an RWA from a Bid-Now-Pay-Later Win in an Auction **Automatic Loan Creation** Winning an auction through the Bid-Now-Pay-Later option automatically creates a loan with the RWA as collateral. Therefore, a direct claim action is not required as the RWA is already utilized within your Unlockd Account for the loan. **Managing Your Loan** To access or eventually reclaim the RWA, you'll need to manage or settle the loan. Detailed steps for these actions can be found in the corresponding sections of our user guide. [Managing Your Loan](/user-guides/how-to-take-an-instant-loan/how-to-manage-your-loan) provides insights into adjusting loan terms, adding collateral, or repaying the loan, while [Settling Your Loan](/user-guides/how-to-take-an-instant-loan/how-to-settle-your-loan) guides you through the process of loan closure and reclaiming your RWA.
*** ### Related documentation {% content-ref url="/pages/VleFIbNSssFuGekrVqzw" %} [Liquidators](/unlockd-at-a-glance/liquidators) {% endcontent-ref %} {% content-ref url="/pages/RxpGCT5kpmm9KptEV9TZ" %} [Marketplace](/protocol-mechanics/marketplace) {% endcontent-ref %} {% content-ref url="/pages/J90JjSoo8zQTcRKhdhAO" %} [Liquidations](/protocol-mechanics/liquidations) {% endcontent-ref %} *** {% hint style="info" %} Screenshots in these guides are mock-ups and may differ from the live platform, particularly in text details. The Unlockd team regularly updates guides to reflect UX improvements. {% endhint %} # How to auction/list/sell an asset Looking to monetize your RWAs? Unlockd provides versatile options to list your assets for sale or auction directly from your loan's collateral. Learn how to instantly sell at market value, list at a fixed price, or initiate an auction with or without a buyout option.
Sell instantly an RWA from your Loan's Collateral at Market Value **Accessing Instant Sell:** 1. **Open "Manage Loan"**: Find the loan containing the RWA you wish to sell. 2. **Select "Instant Sell"**: Choose the RWA you're considering for a quick sale. **Potential Outcomes:** * **No Market Offers**: If there are no current bids for your RWA on marketplaces, the sale cannot proceed. * **Health Factor Issue**: Should any available offers result in your Health Factor dropping below 1, the sale is blocked. You may consider repaying part of your loan or adding more RWAs to improve your Health Factor. * **Sellable Offers**: The best offer among all possible marketplaces is presented. If selling won't get your Health Factor to go below 1, you can proceed with the sale. **Selling Process:** 1. **Confirming the Sale**: Upon deciding to sell, you'll be prompted to approve a transaction, covering the necessary gas fees. 2. **Completion**: Once confirmed, Unlockd takes care the sale automatically, and funds are sent directly to your personal wallet, not the Unlockd Account, not to repay your loan.
List an RWA from your Loan's Collateral at a Fixed Price in the Unlockd Marketplace 1. **Initiating the Listing**: In the Borrow section, navigate to your active loan and select the RWA you wish to list. 2. **Choosing Your Listing Type**: Select "List for Sale" and choose the Fixed Price option. 3. **Setting Your Price**: Input your desired selling price. Consider reviewing the last sale price in global marketplaces as a benchmark. 4. **Debt Listing Percentage**: Specify what fraction of the outstanding loan's debt this RWA sale will cover. This dynamically adjusts your net earnings preview, as this amount is automatically deducted from the final sale to repay part of your loan. 5. **Finalizing the Listing**: After setting your price, confirm the transaction and cover the gas fees. Your RWA is now listed in the Unlockd Marketplace for all potential buyers.
Auction an RWA from your Loan's Collateral in the Unlockd Marketplace 1. **Initiating the Auction**: In the Borrow section, navigate to your active loan and select the RWA you wish to list. 2. **Select Auction Type**: Opt for the Auction method. You'll need to set a minimum starting bid to kickstart the auction. 3. **Auction Duration**: Determine how long the auction will run. Use the RWA's valuation and market trends to set a competitive starting bid. 4. **Debt Listing Percentage:** Specify what fraction of the outstanding loan's debt this RWA sale will cover. This dynamically adjusts your net earnings preview, as this amount is automatically deducted from the final sale to repay part of your loan. 5. **Listing Completion**: Confirm your listing through a transaction, paying the necessary gas fees. Your RWA is now up for auction in the Unlockd Marketplace.
Auction and set a Buyout Price for an RWA from your Loan's Collateral in the Unlockd Marketplace 1. **Initiating the Auction and Listing**: In the Borrow section, navigate to your active loan and select the RWA you wish to list. 2. **Price and Debt Settings**: Input both an auction starting price and a fixed buyout price. The buyout price allows buyers to immediately purchase the RWA, bypassing the auction if they prefer. 3. **Debt Listing Percentage:** Specify what fraction of the outstanding loan's debt this RWA sale will cover. This dynamically adjusts your net earnings preview, as this amount is automatically deducted from the final sale to repay part of your loan. 4. **Auction Details**: Set the auction's timeframe. If a buyout price is set, buyers have the option to end the auction early by meeting this price. 5. **Launching the Listing**: After finalizing your settings, initiate the listing with a transaction and cover any associated gas fees. Watch as your RWA attracts bids or an instant buyout in the Marketplace.
*** ### Related documentation {% content-ref url="/pages/9h8RRjKNs0iGFVSJ05Jf" %} [How to manage your loan](/user-guides/how-to-take-an-instant-loan/how-to-manage-your-loan) {% endcontent-ref %} {% content-ref url="/pages/RxpGCT5kpmm9KptEV9TZ" %} [Marketplace](/protocol-mechanics/marketplace) {% endcontent-ref %} {% content-ref url="/pages/J1ZURQjX1f2FGbdmmEv9" %} [Health Factor](/protocol-mechanics/liquidations/health-factor) {% endcontent-ref %} *** {% hint style="info" %} Screenshots in these guides are mock-ups and may differ from the live platform, particularly in text details. The Unlockd team regularly updates guides to reflect UX improvements. {% endhint %} # How to enable Notifications Please, refer to our step-by-step guide to [Understanding Unlockd Notifications](/protocol-mechanics/notifications). # Unlockd Account The Unlockd Account is a cornerstone feature of the Unlockd platform, enabling a seamless and secure fusion of asset liquidity and utility. This specialized account functions similarly to a multi-signature wallet and is essential for engaging in activities involving debt on Unlockd, such as taking out instant loans or using the 'Bid-Now-Pay-Later' feature in marketplace auctions. There's no such thing as "signing up" here, this is not a Web 2 account. You do not need an email or password; it's created linking your personal wallet as an authorized signer. ## Core Functionality The Unlockd Account operates as a shared wallet, making it a requisite for any debt-related transactions. It's built on the reliable security infrastructure of Gnosis Safe, providing a trusted environment for your transactions. Although it’s recommended for all transactions on the platform, it’s mandatory when you want to take an instant loan or engage in any debt-related activity. ## Setting Up Your Unlockd Account Creating your Unlockd Account is straightforward: 1. Prompted during your first borrowing action or when opting for 'Bid-Now-Pay-Later'. 2. Connect your personal wallet (like Metamask or Coinbase Wallet) to Unlockd. 3. Approve the creation of a shared wallet, where you're one of three signers – the user, the Delegate Owner, and the Protocol Owner. 4. A gas fee is required for setup; however, using this account will result in lower transaction costs compared to using a standard wallet. 5. Once created, you can access your Unlockd Account by connecting your personal wallet through WalletConnect, offering a hassle-free user experience. ## Asset Transfer and Gas Implications All transfers into and out of your Unlockd Account, whether depositing assets for a loan or withdrawing them back to your personal wallet, require gas. It’s important for users to factor in these transaction costs when managing their assets within the Unlockd ecosystem. ## Asset Management and Utility Your Unlockd Account is versatile: ### **Before a Loan** Use it as a standard wallet to deposit, withdraw, and manage assets freely. ### Checking Collateral Eligibility To ascertain if your assets are eligible for use as collateral without transferring them, simply connect your personal wallet to the Unlockd platform. The Unlockd Account will read the tokenized assets in your wallet and indicate which ones are eligible for collateralization, streamlining the pre-loan preparation. ### Pre-Loan Asset Analysis Before initiating a loan, you might want to evaluate which assets to bundle based on their valuation and the potential Loan-To-Value (LTV) ratio. To facilitate this, transfer the assets you’re considering as collateral from your personal wallet to your Unlockd Account. It's here that you'll be able to see detailed appraisals and LTV calculations for each asset. ### **After Loan Initiation** Specific assets used as collateral are managed jointly by you and Unlockd, with two additional signers stepping in to facilitate and safeguard operations. **Thanks to this, you keep full custody and ownership of all deposited assets**. Not Unlockd, not any decentralized smart contract. You are the owner of your assets. Learn more here: {% content-ref url="/pages/SYi9MrjG5zBmCdzMbOtR" %} [Keep Custody & Ownership](/protocol-mechanics/keep-custody-and-ownership) {% endcontent-ref %} ## Signers and their roles Once you decide to activate a loan using selected assets in your Unlockd Account, these assets enter a shared control mechanism: * **Delegate Owner**: Handles collateral assets' delegation. * **Protocol Owner**: Engages in two scenarios: * **Liquidation**: Automatically intervenes to liquidate part of the collateral if necessary to recover the loan’s health factor, following our Liquidation Process. * **Marketplace Transactions**: Manages listings or auctions of assets on the Unlockd Marketplace, whether they're with or without debt. ## Liquidation and Market Participation * **Multi-Signature Dynamics**: When assets are in an active loan, the Delegate Owner and Protocol Owner have joint control to optimize protocol health and maintain asset utility. All transactions performed by the user are executed through one of these two signers. * **Loan Repayment and Asset Freedom**: While assets are in an active loan, they reside in your Unlockd Account but are subject to the conditions of the loan. Free assets not under loan can still be transacted freely. # Keep Custody & Ownership Unlockd ensures that users retain full ownership and custody of their collateralized assets through user-specific wallets (Unlockd Accounts). While Unlockd has signing rights to these wallets to prevent unauthorized transactions when assets are used as collateral, the custodial responsibility remains with the user. * **User Ownership and Custody**: Users maintain full ownership and custody of their assets. Unlockd does not take custody of the assets but ensures their security by preventing unauthorized transfers during active collateral periods. * **Preventing Unauthorized Transfers**: Unlockd’s signing rights are used exclusively to prevent unauthorized transactions when assets are active collateral. This ensures that the assets remain secure and cannot be transferred without proper authorization. ### Compliance and Regulatory Implications * **Adherence to KYC/AML Regulations**: By maintaining ownership and custody through their Unlockd Accounts, users comply with Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations. * **Accreditation Verification**: For users holding assets that require accreditation (such as certain securities or private equity), Unlockd facilitates the traceability process with tokenizing partners. This is particularly important for tokenized financial assets. * **Regulatory Reporting**: The transparent nature of Unlockd Accounts allows for accurate and timely regulatory reporting. This transparency helps in meeting various regulatory requirements, including those imposed by securities regulators and financial authorities. * **Compliance with Custody Rules**: Since the user retains custody and Unlockd only prevents unauthorized transfers, this setup complies with custody rules set forth by financial regulators. Users' assets are safeguarded according to industry best practices. ### Legal and Security Assurance * **Legal Title Retention**: Users retain legal title to their assets at all times. Unlockd’s role is limited to preventing unauthorized transfers, ensuring that ownership rights are not compromised. * **Transaction Security**: With Unlockd having signing rights to prevent unauthorized transactions, all asset movements comply with user intentions and regulatory requirements, providing a secure environment. * **Audit and Compliance Checks**: Regular audits and compliance checks are conducted to ensure that Unlockd’s practices meet all regulatory standards, providing users with confidence in the security and legality of their asset management. # Liquidity Pools Contrary to the inefficient Peer-To-Peer model, the Unlockd liquidity model relies on Liquidity Pools. Users contribute their assets to a large pool of liquidity called the Lending Pool. This pool is available for borrowers to borrow from, and lenders share in the interest that borrowers pay back to the pool. ## Benefits of Liquidity Pools The primary advantage of utilizing Liquidity Pools is the immediate availability of funds for borrowers. Unlike traditional Peer-to-Peer lending, which requires matching individual lenders with borrowers, Liquidity Pools allow for instant borrowing without the wait, streamlining the loan process significantly. ## uTokens One of the advanced features of the lending pool contract is the tokenization of the lending position. When users deposit assets, they receive a corresponding amount of uTokens (uUSDC for the stablecoins pool). All interest collected by the Borrowing Interest Rates model is distributed to uToken holders directly by continuously increasing their wallet balance. uTokens are the interest-bearing ERC-20 tokens that map the liquidity deposited and accrue interest based on the underlying deposited asset (USDC), with a 1:1 ratio. uTokens are minted upon deposit. Their value increases until they are burned on redemption (withdrawing the liquidity from the Lending Pool). uTokens can be safely stored, transferred, or traded, and redeemed for their underlying assets at any time. ## Deposit APY uTokens holders receive continuous earnings that evolve with market conditions. uTokens holders share the interests paid by borrowers. The borrow interest rates paid are distributed as yield for uTokens holders who have deposited in the protocol, excluding a share of yields sent to the ecosystem reserve defined by the reserve factor. This interest rate is paid on the capital lent out and then shared among all the liquidity providers. The deposit APY, $$D\_t$$, is: $$D\_t = U\_t \* B\_t \* (1-R\_t)$$. $$U\_t$$: the utilisation ratio. $$B\_t$$: the variable borrow rate. $$R\_t$$: the reserve factor. ### Deposit Interest Rate Curve
You can view the protocol's real-time deposit APY on the Unlockd dApp for providing liquidity in the form of USDC tokens. {% hint style="info" %} For learning about the Borrower Interest Rates model, check our Risk Framework Documentation. {% endhint %} # USDC Pool This pool provides liquidity for both RWAs and tokenized financial assets. In this pool, lenders deposit USDC, a stablecoin pegged to the US dollar, which offers a stable value proposition in contrast to more volatile cryptocurrency assets. This stability is particularly advantageous for loans backed by RWAs, as it aligns more closely with the valuation and behavior of real-world financial markets. # Idle Liquidity Booster When liquidity is deposited into Unlockd pools, it serves as the source of funds for borrowers accessing loans. However, there are instances when the utilization rate is low, resulting in idle liquidity within the pools. To maximize the potential of this idle liquidity, Unlockd has introduced the Idle Liquidity Booster. Through this program, the idle liquidity is routed towards the most secure and trusted protocols in the DeFi landscape, engaging in ultra-low-risk farming strategies via the AI-powered maxAPY protocol. {% embed url="" %} The additional yield generated from these strategies is mainly utilized to **boost the yield accrued by lenders when the utilization rate is low**. This ensures that lenders benefit from increased returns on their deposited funds . Additionally, this extra yield will also be directed towards **reducing the interest paid by borrowers**, providing them with a cost-saving advantage when repaying their loans, when the utilization rate grows.
Utilization RateReduced Interest for Borrowers / Boosted Yield for Lenders
0%100% | 0%
10%77.78% | 22.22%
20%55.56% | 44.44%
30%33.34% | 66.66%
40%11.12% | 88.88%
45% (Optimal UR)0% | 100%
50%0% | 100%
60%0% | 100%
70%0% | 100%
80%0% | 100%
90%0% | 100%
100%0% | 100%
# Loan characteristics Selling your tokenized assets means losing the potential upside value gain and triggering a capital gains tax event. By depositing your RWAs as collateral, you are able to obtain liquidity (working capital) without selling your assets and not incurring capital gains taxes.
FeatureUnlockd ApproachTL;DR
CollateralLuxury assets, trading cards, precious metals, gemstones, fine wines, real estate, financial assets.RWAs as collateral options beyond just digital NFTs.
Max assets per loan100Up to 100 different RWAs from any asset category can be bundled per loan.
AvailabilityInstantFunds are available immediately without the need to agree with a lender.
ValuationIndividual, no floor priceAssets valued on a case-by-case basis, not just by the lowest market price.
Loan-To-ValueDynamic, 0-75%Flexible LTV ratios tailored to individual assets and market conditions.
Collateral utilityKeep full ownership and utilityKeep full ownership, custody and any on-chain utility while used as collateral. You can't sell or transfer the asset.
DurationOpen-endedRepay on your own schedule; no fixed end date.
InterestDynamic, linear, fairInterest rates are reasonable, predictable, based on a mathematical model and adjust with the market.
RepaymentFlexiblePay back in installments or all at once, your choice.
LiquidationHF < 1Loans are liquidated with a smart algorithm only if the Health Factor drops below 1.
SecurityNon-custodial, auditedYour assets are safe and the protocol's integrity is verified by auditors.
TaxationTax-efficientBorrowing against assets can be more tax-savvy than selling them.
## Loan characteristics ### RWAs as collateral In Unlockd, you borrow fungible cryptocurrency against Non-Fungible-Tokens used to tokenize Real-World Assets and financial assets (RWAs). Instead of using fungible tokens as collateral for loans, which is suboptimal since you lock liquid tokens to get other liquid tokens, Unlockd lets yo turn illiquid assets into productive, liquid ones. ### 100 assets in a single loan with 1 transaction Borrowers can bundle up to 100 different assets as collateral for a single loan, if they use liquidity from the same pool. This feature allows for significant diversification of collateral, increasing borrowing power and mitigating the risk associated with the volatility of individual assets. ### Instant borrowing Unlockd offers immediate loan availability. Borrowers can access funds instantly from Liquidity Pools, eliminating the traditional waiting period often required in loan processing and the need for individual lender agreements. ### True valuation for each individual asset Each asset is valued individually without resorting to any kind of floor price. Unlockd utilizes specialized appraisal techniques from world-class providers to determine the value of each asset based on its unique characteristics and market conditions. ### Dynamic Loan-To-Value The Loan-to-Value (LTV) ratio is dynamic, ranging from 0% to 75%, depending on the specific asset and prevailing market conditions. This range allows for flexible borrowing options that reflect both the value of the collateral and market trends. ### Keep 100% of asset custody Borrowers retain full custody and ownership of their assets when used as collateral. This ensures compliance with KYC/AML regulations and transparent, verifiable ownership. While the assets cannot be sold or transferred during the loan period, borrowers continue to enjoy benefits like airdrops, staking rewards, and access to token-gated communities. ### Open-ended loans Loans on Unlockd have an open-ended duration, offering borrowers the flexibility to repay the loan at their convenience without worrying about a set expiration date. No rush here, as long as you pay attention to the [Health Factor](/protocol-mechanics/liquidations/health-factor) to ensure the protocol's solvency. ### Fair interest and flexible repayment The interest rate is dynamic but follows a linear and fair model, ensuring borrowers are subject to reasonable rates that align with a mathematical model and adapt to market conditions. Unlockd allows for flexible repayment terms, permitting borrowers to make payments towards their loan either in installments or as a lump sum, depending on their financial situation. ### Smart Liquidations that minimizes lost assets If the Health Factor (HF) of a loan falls below 1, Unlockd's smart liquidation algorithm is triggered to safeguard the health of the lending protocol. This process is designed to be as unobtrusive as possible while ensuring the stability of the platform. ### Permissionless and secure The Unlockd protocol is non-custodial: a set of decentralized smart contracts. The law of code governs it, and the Unlockd team at no point has any access to any of the assets deposited. The whole protocol has been fully reviewed and tested by [world-class auditors ](https://risk.unlockd.finance/external-audits-and-analysis/our-commitment-to-security)to ensure both lenders' and borrowers' security, together with our own [Risk Framework model ](https://risk.unlockd.finance/)to foster the health of the protocol and its loans. ### Tax-efficiency for borrowers By borrowing against assets instead of selling them, Unlockd users may enjoy a more tax-efficient strategy, potentially avoiding the capital gains taxes that would accrue upon the sale of an asset. # Collateral Valuation Leaving obsolete floor pricing behind with the help of third-parties. Unlockd collaborates with specialized third-party experts to overcome the limitations of onchain RWA appraisals. By partnering with these experts, we ensure that each asset is appraised accurately and fairly. These experts employ diverse models, input variables, and advanced Data Science techniques to assess the value of each asset individually. This meticulous approach ensures that the valuations are not only precise but also reflective of the true worth of each asset. The appraised values, along with their error bounds, are then integrated into Unlockd's Dynamic Loan-to-Value (LTV) Model. This integration allows for a more accurate and individualized borrowing amount for each asset. By combining expert appraisals with our advanced LTV model, we provide borrowers with fair and precise loan amounts, ensuring that each asset's unique characteristics and value are accurately reflected in the lending process. # Physical Assets In Unlockd, the valuation of Real-World Assets (RWAs) is a critical component, ensuring that loans are backed by accurately appraised collateral. Our approach integrates data from trusted tokenization partners who specialize in various asset classes. By leveraging their expertise and advanced valuation methodologies, we offer users a transparent and reliable process for RWA valuation. ## Real Estate These providers offer robust and reliable valuation data for real estate assets. #### Roofstock onChain Roofstock OnChain specializes in tokenized single-family houses, offering complete ownership through Home onChain Tokens. Ownership tokens represent full ownership of the entire house, not fractional ownership, with options for crypto or fiat payment and blockchain-based financing. * **Transparent Pricing**: The pricing for onChain homes includes all costs, such as marketplace fees, Roofstock OnChain seller fee, closing costs, first-year insurance, and LLC administration. * **Direct Valuation by Roofstock**: Each property's value is directly provided by Roofstock OnChain, ensuring clarity and transparency in the appraisal process. **Colliers** Colliers is a prominent professional services and investment management company with a history of delivering significant annual investment returns. They offer comprehensive services across all real estate sectors, including residential, hotels, offices, and more, ensuring deep market expertise. * **Specialized Valuation Services**: Colliers provides specialized services like corporate finance, debt advisory, capital markets, and valuation consulting, emphasizing accuracy and reliability in real estate valuation. * **Diverse Sector Coverage**: Their valuation covers various sectors, from traditional residential and commercial spaces to specialized segments like data centers, healthcare, and sustainable assets. ## Watches #### **Watches.io** The integration of Watches.io with Upshot's AI network ensures that Unlockd's collateral valuation for watches is grounded in expertise, thorough appraisal processes, and advanced AI-driven data analysis, offering reliable and up-to-date market valuations. Watches.io brings together a team with over 40 years of combined experience in watch trading and connections in the luxury watch industry. * **Condition and Authenticity**: Appraisals are based on watches being in perfect working condition, including original manufacturer boxes and serial numbered cards. * **Inspection Standards**: Each watch undergoes thorough inspection by verified watchmakers and checks against databases of stolen watches. * **Detailed Appraisal Data**: Appraisals include current fair market value, proprietary liquidity grading, time-weighted volatility estimates, and interval-bounded price performance. * **Data Sources and Methodology**: Utilizes public sources like marketplaces, private trading groups, and industry constituents for data, ensuring a comprehensive market understanding. * **Analysis Approach**: Appraisals are based on multiple indicators, including internal ranking of data sources, pricing nuances, estimations of liquidity, and market volatility for each model. #### **WatchAnalytics** Since 2019, WatchAnalytics has been dedicated to providing in-depth analyses, insights, and news from the luxury watch market. Their commitment to accuracy is supported by extensive in-house data collection and a proprietary pricing algorithm. Founded by three young watch aficionados from Milan, Francesco Boni, Francesco Bortolan, and Stefano Fusai, WatchAnalytics launched in November 2022 to make the watch-buying process more accessible. #### Chrono24 Chrono24 is a leading global online marketplace for luxury watches, offering easy and secure access to watch enthusiasts worldwide. With over 570,000 watches from more than 32,000 professional dealers and private sellers, Chrono24 utilizes advanced algorithms and data analysis to provide accurate market valuations and ensure transparency in transactions. The platform's robust infrastructure and dedication to security and trust make it a go-to resource for luxury watch buyers and sellers​ ## Cards Unlockd utilizes multiple third-party providers' comprehensive data analysis for trading card valuations, offering users reliable and up-to-date market insights for loan collateral assessment. #### PriceCharting * **Comprehensive Data Collection**: PriceCharting.com aggregates sold listing data from eBay and their own marketplace, processing it through proprietary algorithms to determine current market prices for collectibles like trading cards. * **Algorithmic Pricing Methodology**: Their algorithms account for various factors, including recent sale prices, median and average prices, age-weighted averages, and outliers. This ensures a balanced and accurate market price calculation. * **Graded and Ungraded Card Prices**: PriceCharting.com provides prices for ungraded cards and various graded conditions, including PSA and BGS grades, ensuring a nuanced valuation based on card condition. * **Exclusion of Shipping Costs**: The prices reflect the item's cost alone, excluding shipping or transaction-related expenses for clarity and precision in valuation. * **Quality Control Measures**: To maintain data integrity, PriceCharting.com employs automated models and user reviews to remove inaccurate or misclassified sales data, ensuring the reliability of their pricing information. #### Specialized Pokémon Data Providers * **PokemonPrices.com**: PokemonPrices.com provides a comprehensive database for tracking and valuing Pokémon cards. It offers up-to-date pricing information based on recent sales data, helping collectors and investors make informed decisions. * **PokeCardValues.co.uk**: Poke Card Values is a tool designed to help users assess and track the value of their Pokémon card collections. It leverages a bespoke search algorithm that pulls data from eBay UK sales, ensuring accurate and current valuations. * **PokemonWizard.com**: PokemonWizard.com is a platform that aggregates pricing data for Pokémon cards. It provides users with tools to manage their collections, track market trends, and obtain accurate price estimates. * **CardMavin.com**: CardMavin offers a price guide for Pokémon cards, utilizing historical sales data to provide accurate values for both graded and ungraded cards. It helps determine the worth of their collections and individual cards. * **PokemonPrice.com**: PokemonPrice.com specializes in offering detailed pricing information for Pokémon cards, focusing on market trends and providing a reliable resource for collectors to gauge the value of their cards. * **PokeData.io**: PokeData.io combines in-depth analysis with a proprietary pricing algorithm to offer accurate, transparent market valuations for Pokémon cards. It aims to make the trading card market more accessible and understandable for enthusiasts. *** {% hint style="warning" %} While our [tokenization partners ](/unlockd-at-a-glance/supported-rwas)support a wide range of Real-World Assets, it's important to note that not all RWAs can be integrated into Unlockd's platform immediately. The integration of certain assets is contingent upon the availability of solid, reliable sources of price data. This is crucial to maintain the accuracy and reliability of our collateral valuation process. We continuously strive to expand our asset coverage, but this expansion is always aligned with our commitment to secure and precise valuation standards. {% endhint %} # Financial Assets *Coming soon...* # Multi-Asset Collateral Collectors and investors often hold a portfolio of various assets. Recognizing the need for flexibility and leveraging power in the DeFi space, Unlockd introduces the feature of **Multi-Asset Collateral.** This unique offering allows borrowers to collateralize a bundle of up to 100 tokenized assets from different asset types for a single loan, providing a more substantial liquidity option than could be achieved with individual RWAs. It's important to understand the parameters within which this feature operates to ensure a smooth borrowing experience. ## **Maximum Number of Assets** While the Multi-Asset Collateral feature allows for significant diversification, there is a recommended limit of 100 RWAs per bundled loan. This threshold is suggested to ensure transaction reliability and to avoid potential reverts due to excessive computational complexity or gas limits on the blockchain. {% hint style="danger" %} Although there isn't a hard cap set on the number of assets you can bundle, transactions involving more than 100 RWAs might fail due to blockchain limitations. Therefore, it is advised to keep the number of assets in a bundled loan below 100. For those who wish to bundle more than this suggested limit, it is recommended to proceed with caution and at their own risk, as this might lead to increased chances of transaction failure and potential loss of transaction fees. {% endhint %} {% hint style="success" %} In Multi-Asset collateral loans, you have the flexibility to remove tokenized assets from the collateral bundle. This can be done **as long as the action keeps your loan's Health Factor (HF) above 1**. Carefully assess your loan's HF before and after the removal of any asset to ensure it remains healthy and not at risk of liquidation. {% endhint %} ## Advantages of Bundling Assets * **Diversification of Risk**: By bundling multiple assets, borrowers can mitigate the risk associated with the volatility of individual assets. A diversified portfolio as collateral helps in balancing out the loan's risk profile. * **Increased Loan Value**: Collateralizing multiple assets can potentially increase the overall loan value accessible to the borrower. This is particularly beneficial for those looking to maximize their borrowing power. * **Efficient Management**: Managing one loan with multiple assets is easier and more gas-efficient than obtaining and managing multiple loans for individual assets. This streamlined approach saves time and transaction fees. ## Appraisal and Loan-to-Value (LTV) The value of each asset within the bundle is individually assessed using Unlockd's advanced appraisal providers, which take into account factors like rarity, market demand, and the asset's intrinsic characteristics. For specific information about how this works, check the Collateral Valuation section. The LTV for the loan is then dynamically calculated based on the combined appraisal of the bundled assets, ensuring a fair and accurate representation of the bundled collateral's worth. ## Repayment and Liquidation Repayment terms for loans with multiple assets remain as flexible as they are for single-asset loans. Borrowers can repay the loan in installments or as a lump sum based on their financial convenience. In the event of a liquidation trigger, where the Health Factor falls below 1, the smart liquidation process activates, which is designed to be as minimally disruptive as possible while protecting the interests of both borrowers and lenders. {% hint style="info" %} In the event of liquidation, after a substantial grace period for the borrower, automatic liquidations may need to be conducted via an External Liquidation Gateway, as detailed in our Liquidation Process. **The smart algorithm is designed to minimize the total number of assets needed to be liquidated in order to recover the Health Factor**. We strongly recommend reviewing the Liquidations section to understand how this could affect your bundled assets. {% endhint %} # Dynamic Loan-To-Value The Loan to Value (LTV) ratio defines the maximum amount of currency that can be borrowed with a specific collateral. It’s expressed as a percentage: at LTV=30%, for every $100 worth of asset collateral, borrowers will be able to borrow $30 worth of USDC. {% hint style="success" %} With the latest update to our underlying model, users can now avail themselves of **loans amounting to up to 75% of the actual value of their assets**. \ \ This enhancement is coupled with our steadfast commitment to upholding the **highest standards of financial security**, positioning us as a **leading RWA-backed protocol** in terms of advanced safety measures. {% endhint %} ## Dynamic Loan-To-Value Unlockd's Data Science team has developed a sophisticated Dynamic Loan-To-Value (LTV) model, expertly balancing user risk in an optimal way. The LTV model considers a range of factors, such as the volume of data available for asset valuation and the current market volatility. High-quality, abundant data coupled with low volatility leads to a higher LTV, reflecting the enhanced reliability of the valuation algorithm in stable market conditions. The model is designed to adjust LTVs in real-time, responding to changes in overall market volatility, specific asset class volatility, and the volatility of individual assets. {% hint style="info" %} As a result, **two assets of similar value can have different LTVs under this model.** This is due to the model's nuanced approach, which extends beyond mere appraisal value, incorporating data availability, recent market fluctuations, and other relevant elements into its calculation. {% endhint %} ### Risk Mitigation Strategies * **Proactive Safeguards**: Beyond setting loan collateral ratios, the dynamic LTV model plays a crucial role in risk mitigation. It closely monitors reserve levels and the activities of other lending protocols to inform its decisions. An increase in reserves triggers a strategic response from the model, reducing the issuance of new category-based loans, thereby managing selling pressure on the protocol. * **Maintaining Stability**: This proactive management of lending activities, based on reserve levels and market dynamics, is vital in sustaining the protocol's integrity and resilience. It effectively shields the protocol from potential adverse effects of market fluctuations, securing its long-term health and reliability. You can learn about all the aspects of this model here: {% content-ref url="/spaces/BzmUYUOyJFXUS4pOluKk" %} [Unlockd Risk Framework](https://risk.unlockd.finance/) {% endcontent-ref %} # Liquidations Liquidation is a critical process within the Unlockd platform, designed to maintain the balance and security of the lending system. It's essential for both borrowers and lenders to understand how liquidations work, as they play a key role in the platform's risk management strategy. ## What Triggers a Liquidation * **Health Factor Breach**: Liquidation is initiated when a borrower's Health Factor falls below 1. This typically occurs when the value of the collateral no longer adequately covers the value of the borrowed debt. Such a situation can arise if the collateral's value decreases or if the borrowed asset's value increases disproportionately. * **Market Volatility Impact**: Fluctuations in the market can affect the value of both collateral and borrowed assets, potentially leading to scenarios where the collateral is insufficient to secure the debt. ## Liquidation as a Protection Mechanism * **For Lenders**: From the lender's perspective, liquidation acts as a safeguard. It protects against extreme price drops that could lead to under-collateralization and, consequently, liquidation. * **For Borrowers**: Borrowers face the risk of losing their collateralized assets permanently in a liquidation event. This happens when the protocol allows another party to repay the borrower's debt in exchange for the collateralized asset following the breach of the Health Factor threshold. ## Avoiding Liquidation As a borrower, you can avert liquidation by closely monitoring your Health Factor and taking action if it approaches the critical threshold. * **Depositing Additional Collateral**: Boosting your loan's Health Factor by adding more collateral can help maintain the necessary buffer against market volatility. * **Partial Loan Repayment**: Repaying part of your loan is often more effective in increasing your Health Factor compared to depositing additional collateral, especially considering the impact of LTV ratios. ## The Consequence of Liquidation: Loss of ownership In the event of liquidation, borrowers permanently forfeit ownership of their collateralized assets. This underscores the importance of proactive loan management and understanding the inherent risks. *** Liquidation, while serving as a necessary mechanism to protect the integrity of the lending system, can have significant consequences for borrowers. It is essential for users of Unlockd to understand the dynamics of liquidation, how it's triggered, and the steps that can be taken to prevent it. Careful management of your assets and awareness of market conditions are key to maintaining a healthy loan status on Unlockd. # Health Factor The health factor is the numeric representation of the safety of your deposited assets against the borrowed cryptocurrency and its underlying value. The higher the value is, the safer the state of your funds are against a liquidation scenario. For each wallet, the LTV and Liquidation threshold risks parameters enable the calculation of the health factor: $$ H\_f = \frac{\sum Collateral: value,\_i :\times:Liquidation:Threshold:\_i}{Total : Borrows:value} $$ When $$H\_f < 1$$ the position may be liquidated to maintain solvency. Depending on the value fluctuation of your deposits, the health factor will increase or decrease. If your health factor increases, it will improve your borrow position by making the liquidation threshold more unlikely to be reached. In the case that the value of your collateralized assets against the borrowed assets decreases instead, the health factor is also reduced, causing the risk of liquidation to increase. ### How to interpret your Health Factor * 0.0 < HF < 1.0: Dangerous, borrower may lose collateral if the debt is not repaid as soon as possible. * 1.0 <= HF <= 1.5: Risky, borrower should repay part of the debt timely. * 1.5 < HF < 2.0: Careful, borrower should pay attention and monitor their debt. * 2.0 <= HF: Safe, the loan is at no close risk of liquidation. Liquidation will be triggered if the HF reaches 1. # Borrower Grace Period In Unlockd's commitment to a fair and supportive borrowing environment, the Borrower Grace Period plays a vital role. This period is a key protective measure, offering borrowers a significant window to address and rectify potential liquidation scenarios, with the duration varying based on the type of collateralized asset. ## Grace Period Duration The Borrower Grace Period is initiated the moment a loan's liquidation is triggered. Its primary purpose is to provide borrowers with a fair chance to respond and take necessary actions to protect their collateralized assets. During this critical timeframe, the auction for the collateralized assets opens, but borrowers retain the power to avert the loss of their assets.
Asset typeDuration
Real-World Assets7 days
Financial AssetsComing soon...
{% hint style="warning" %} These grace period durations are subject to change as Unlockd encounters real-market scenarios and gathers more data on the optimal timeframes for different asset types. **Stay informed about any updates to these policies through our platform announcements.** {% endhint %} ## Actions for Borrowers during the Grace Period When facing potential liquidation, borrowers are not necessarily required to repay the entire debt to halt the process. Instead, the focus is on restoring the loan's Health Factor above 1. To achieve this, borrowers can: * **Repay Partially**: Make a partial repayment sufficient to bring the Health Factor back over one, plus any applicable fees or fines (the Critical Recovery Threshold). These additional costs are implemented to compensate bidders for their gas expenses during the auction. * **Asset Management**: Assess and adjust your loan strategy, potentially adding more collateral if feasible, to improve your Health Factor. {% hint style="info" %} ### **Critical Recovery Threshold (CRT)** \ The 'Critical Recovery Threshold' (CRT) is a key term in Unlockd's liquidation process, referring to the minimum amount of debt that must be recovered to elevate the Health Factor (HF) above 1 and prevent loan liquidation. {% endhint %} The Borrower Grace Period is a crucial component of Unlockd's liquidation process, emphasizing our dedication to fair lending and borrower empowerment. By offering this substantial window, we ensure borrowers have the opportunity to take corrective actions, thereby mitigating the risk of losing their valuable assets. # Liquidation Process Liquidations in Unlockd are activated under specific conditions, primarily focusing on the collateral's value in relation to the borrowed amount. This process is essential for maintaining the platform's financial integrity and safeguarding the interests of lenders. #### Key Triggers for Liquidation: 1. **Asset Depreciation**: Liquidation occurs if the net value of all assets bundled as collateral depreciates, reducing the coverage for the borrowed amount. 2. **Borrowed Cryptocurrency Appreciation**: For loans backed by WETH, an increase in the value of the borrowed cryptocurrency can trigger liquidation. This does not apply to Real-World Assets (RWAs) or USD-denominated Token Streams, as they borrow from the USDC Pool. 3. **Accrued Interest**: If the accrued interest on the borrowed amount increases significantly, it can lead to a scenario where the loan becomes under-collateralized, initiating liquidation. These triggers are designed to respond to market dynamics and ensure the loan remains sufficiently collateralized, protecting both borrowers and lenders in Unlockd's ecosystem. {% hint style="info" %} During Unlockd's Liquidation Process, it's important to note that **the loan is temporarily restricted from additional borrowing**. This restriction applies even if bids during the liquidation are sufficient to cover the Critical Recovery Threshold (CRT) and raise the Health Factor (HF) above 1. The borrower will be unable to borrow more until the Borrower Grace Period concludes, regardless of the HF status, ensuring the stability and integrity of the ongoing liquidation process. {% endhint %} *** ## *Step 1*: Auction and Borrower Grace Period When a liquidation is triggered in Unlockd, it sets in motion a well-defined process that involves both a public auction and the initiation of a Borrower Grace Period. #### Public Auction of Collateralized Assets Upon liquidation trigger, all RWAs used as collateral are placed in a public auction within Unlockd's Marketplace. This auction is open to all participants, providing an opportunity for liquidators to acquire valuable assets. Liquidators can participate in the auction using their own funds or opt for the 'Bid Now Pay Later' option. This feature allows them to place bids by partially borrowing from Unlockd, offering flexibility in funding their bids. {% content-ref url="/pages/66amzzWhoCbgPdRF4DXt" %} [Bid Now, Pay Later](/protocol-mechanics/marketplace/bid-now-pay-later) {% endcontent-ref %} #### Initiation of Borrower Grace Period Simultaneously with the auction's start, the Borrower Grace Period begins. The duration of this grace period varies based on the type of collateralized asset. This period allows borrowers the opportunity to take necessary actions to potentially recover their assets and halt the liquidation process. {% hint style="success" %} During the Borrower Grace Period, borrowers have the opportunity to undertake corrective measures. Successful completion of these actions, including a fee to compensate current bidders, immediately terminates the auction and leads to the full recovery of all collateralized assets, effectively halting the liquidation process. {% endhint %} {% content-ref url="/pages/KnfGOWW1ePf0SXwAA2Oi" %} [Borrower Grace Period](/protocol-mechanics/liquidations/borrower-grace-period) {% endcontent-ref %} This initial stage of the liquidation process is crucial as it determines the potential recovery of the assets for the borrower and provides liquidators with opportunities to acquire RWAs through the public auction. The liquidation is halted if the borrower completes the necessary actions to recover the Critical Recovery Threshold (CRT). {% hint style="info" %} ### **Critical Recovery Threshold (CRT)** \ The 'Critical Recovery Threshold' (CRT) is a key term in Unlockd's liquidation process, referring to the minimum amount of debt that must be repaid or recovered to elevate the Health Factor (HF) above 1 and halt loan liquidation. {% endhint %} *** ## *Step 2*: Bidding The bidding process during liquidations in Unlockd is designed to maximize the efficiency of debt recovery while offering potential benefits to both the borrower and the liquidators. Here's a closer look at how bidding works in the event of a liquidation: #### Starting Bid The starting bid for each asset in the liquidation auction is set at the **lower** of two values: A. The RWA price as appraised by our valuation providers B. The Critical Recovery Threshold {% hint style="info" %} If a loan includes both high-value and low-value assets as collateral, a significant bid on the higher-valued asset could suffice to cover the CRT. In such a scenario, successfully covering the CRT with a bid on the more valuable asset could result in the **less valuable RWAs being spared from liquidation,** as the HF would have been recovered. This approach allows for more strategic and targeted bidding, potentially benefiting both the borrower and the liquidator. {% endhint %} #### Binding Bids Bids are binding and involve an on-chain transaction that consumes gas. This commitment ensures the integrity and seriousness of the bidding process. * **Direct Debt Repayment**: When a bid is placed, the bidded amount is immediately used to repay as much of the outstanding debt as possible. This means that the funds from your bid do not go into an escrow contract but are directly applied towards debt reduction. * **Outcome for Winning Bids**: If your bid is the final winning bid, the amount is used to cover the debt. * **Cycle of Bids for Debt Repayment**: In the event of subsequent higher outbids, the new bid repays the previous bidder and applies any remaining funds to further reduce the debt. This process continues until the auction concludes, ensuring efficient debt repayment. * **Automated Return of Funds**: If your bid is outbid by a higher offer, the amount of your bid is automatically returned to you, plus incentives if they apply. This process is instantaneous and managed by the protocol, ensuring that the funds are efficiently cycled through the bidding process for maximum debt repayment efficiency. #### Auction Dynamics and Borrower Benefits * **Continuation of Auction**: If an early bid covers the CRT, the auction for that asset continues for the remainder of the Borrower Grace Period, unless the borrower repays to cover the CRT plus bidder incentives. This allows room for higher bids, which could provide additional returns to the borrower. * **Additional Proceeds**: Any amount bid over the debt recovery target is passed on to the borrower, turning the liquidation into a potentially beneficial situation for them. {% hint style="info" %} In the event of a liquidation auction where the total bids exceed the Critical Recovery Threshold, Unlockd first ensures the loan becomes healthy by covering the necessary amount. Any excess funds from these bids are then directly transferred to the borrower's external wallet, such as MetaMask or another wallet service they use, **not to the Unlockd Account wallet.** {% endhint %} #### Incentive for First Bidder **Unlockd incentivizes the first bidder in a liquidation auction**. If their bid is outbid by another participant or the borrower saves the loan, they receive a reward worth 2.5% of the bid value of the asset. This incentive encourages active participation in the auction and ensures fair compensation for early bidders. *** ## *Step 3*: Auction Conclusion The conclusion of the auction in Unlockd's liquidation process can occur under different circumstances. #### A. Borrower saves the loan If the borrower successfully applies corrective measures that increase the Health Factor (HF) above 1, the auction is immediately terminated. In this scenario, funds are returned to the bidders, assets are recovered by the borrower, and any applicable incentives are paid out. If bids on certain assets are sufficient to cover the CRT, assets without bids are removed from the Marketplace. However, the auction continues for the assets with bids unless the borrower recovers the HF, and pays fines and incentives. At that point, all assets are removed, and funds are transferred back to bidders. #### B. Insufficient Borrower Action If the borrower does not take action to restore the HF, and bids are sufficient to cover the CRT, after the Auction ends, thus ending the Borrower Grace Period: 1. The winners need to manually claim the assets. This consumes a bit of gas. 2. The assets with successful bids are transferred to the respective winners. 3. Assets without bids are returned to the borrower. 4. Any excess funds from the bids, after covering the CRT are returned to the borrower. 5. Any new loan potentially created via 'Bid Now, Pay Later' is initiated as a [standard loan](/protocol-mechanics/loan-characteristics). #### C. Inadequate Bids to Cover CRT If the Borrower Grace Period concludes and the accumulated bids are insufficient to cover the CRT, this marks the end of the auction process. **Assets that have received bids during the auction are available for claim by the highest bidders**, regardless of whether these combined bids reach the CRT. In the cases that the combined bids do not reach the CRT, Unlockd activates External Liquidation Gateways. These gateways are utilized to attempt liquidating **the remaining assets that were not successfully bid on during the auction**. The aim is to recover the CRT through these gateways, ensuring the minimum financial obligations of the loan are met despite the auction not fully covering the CRT. *** ## *Step 4*: Liquidation via External Liquidation Gateway powered by Smart Liquidation Algorithm When the Borrower Grace Period ends without sufficient bids in Unlockd's marketplace auction to cover the CRT, the Smart Liquidation Algorithm, in conjunction with External Liquidation Gateways like Reservoir, takes over the process. #### Smart Liquidation Algorithm's Role The Smart Liquidation Algorithm aims to recover **the minimum amount of debt needed to elevate the Health Factor (HF) above 1**, in other words, the CRT, thereby saving the loan from liquidation. It strategically selects assets for liquidation based on the highest available bids in External Liquidation Gateways, focusing on the most effective way to meet this targeted debt recovery. {% hint style="success" %} The Smart Liquidation Algorithm is designed to **minimize the number of assets liquidated**, reducing adverse effects on the borrower's remaining assets and lessening market sell pressure. By choosing **assets** for liquidation based on their bid values in External Liquidation Gateways, the algorithm aims to recover the essential amount with minimal impact, thus preserving maximum value for the borrower. {% endhint %} #### Integration with External Liquidation Gateways In cases where the marketplace bids are insufficient, the algorithm utilizes Reservoir to find the best available offers for the **assets**, facilitating instant liquidation at market-driven prices. This integrated approach aligns with Unlockd's commitment to an efficient and fair liquidation process, balancing the need to cover outstanding debts while minimizing the impact on borrowers​​. For an in-depth understanding of Unlockd's Smart Liquidation Algorithm and its role in the platform's liquidation process, please refer to our comprehensive documentation. {% content-ref url="/pages/bJZltKbGMeV8KGKoKTr8" %} [Smart Liquidation Algorithm](/protocol-mechanics/liquidations/smart-liquidation-algorithm) {% endcontent-ref %} {% content-ref url="/pages/KNvxyDN591NrObbNiZY8" %} [External Liquidation Gateways](/protocol-mechanics/liquidations/external-liquidation-gateways) {% endcontent-ref %} *** In conclusion, the Liquidation Process in Unlockd is meticulously designed to ensure fairness and efficiency in managing under-collateralized loans. From the initiation of the Borrower Grace Period to the strategic use of the Smart Liquidation Algorithm and External Liquidation Gateways, each step is crafted to balance debt recovery with the protection of borrowers' interests. This comprehensive approach underscores Unlockd's commitment to providing a secure, transparent, and user-centric platform for RWA-backed lending. # Smart Liquidation Algorithm Unlockd's Smart Liquidation Algorithm plays a crucial role in managing multi-collateral loans during liquidation events. This algorithm is specifically designed to address situations where the 7-day Borrower Grace Period has ended without sufficient bids in the marketplace auction to cover the debt. Here's an insightful look into how this process works, focusing on debt recovery and the integration with External Liquidation Gateways like Reservoir. ## Strategic Selection of Assets for Liquidation The primary objective of the liquidation algorithm is to recover the amount equivalent to the borrower’s outstanding debt. This recovery target is the driving factor behind the asset selection process for liquidation. The algorithm considers the highest bids available in External Liquidation Gateways, such as Reservoir, ensuring that the assets chosen for liquidation are those that can most effectively contribute to repaying the debt. * **Minimizing Impact**: When a loan backed by multiple assets faces liquidation, Unlockd’s algorithm prioritizes minimizing the number of assets liquidated. This approach is aimed at reducing adverse effects on the borrower's remaining assets and mitigating sell pressure in the market. * **Optimal Asset Liquidation**: The algorithm selects assets for liquidation based on their bid values to recover the required amount with the least impact. This method ensures that the borrower retains as much value as possible in their loan. ## Examples * **Base Case Example**: For a loan with 3 assets, if the amount to recover is 2500 USDC, and the bids for the assets are 2000 USDC, 500 USDC and 2500 USDC respectively, the algorithm will select the asset with a 2500 USDC bid for liquidation. This selection satisfies the recovery amount while impacting the fewest assets (liquidating 1 asset instead of 2 assets). * **Complex Case Example**: In a loan with ten assets and an 8000 USDC recovery target, the algorithm strategically selects assets with bids that cumulatively meet this target while minimizing the number of assets liquidated. For instance, selecting bids of 6000 USDC and 2000 USDC, rather than higher individual bids that exceed the recovery amount. * **Higher Recovery Requirement**: If the recovery amount is substantially larger, such as 126000 USDC in a ten asset loan, the algorithm will choose a combination of bids (60000 USDC, 50000 USDC, and 20000 USDC, for example) that collectively meet the target while still aiming to liquidate the fewest assets. ## Key Takeaways * **Debt-Centric Approach**: The algorithm’s focus remains steadfastly on covering the outstanding debt, aligning with Unlockd’s commitment to efficient and fair liquidation processes. * **Minimizing Borrower Impact**: By strategically choosing assets for liquidation, the algorithm helps preserve the borrower's remaining asset value as much as possible. *** The Smart Liquidation Algorithm is integral to Unlockd's approach to handling complex liquidation scenarios. It reflects a thoughtful balance between ensuring debt recovery and protecting borrowers' interests, especially in cases where marketplace auctions do not fully cover the debt. For a comprehensive understanding of this algorithm and its role in Unlockd's liquidation process, please refer to our Risk Documentation. # External Liquidation Gateways External Liquidation Gateways are third-party protocols that support Unlockd's [Liquidation Process](/protocol-mechanics/liquidations/liquidation-process). They allow for the liquidation of assets instantly, at a fixed price stipulated by them or the market. Currently, Unlockd supports one protocol for liquidations: Reservoir. If the Unlockd auction process results in no bids, the unhealthy position will be liquidated in one of their supported marketplaces. * **The collateral will be sold to the highest bid in Reservoir.** * **Which assets are liquidated will depend on the Smart Liquidation Algorithm.** {% hint style="info" %} In case the liquidation results in a profit for Unlockd (i.e. the price obtained in the external protocol is greater than the position's debt), the difference between the sell price and the debt will be returned to the borrower. {% endhint %} ## Reservoir Reservoir is open infrastructure for trading assets across major marketplaces and chains. Reservoir treats the NFT and RWA market as one cohesive whole and abstracts the process of interacting with individual orderbooks and exchanges. This means Unlockd gets: * **Upgrade protection** - Since Reservoir abstracts the orderbook and exchange, Unlockd gets exchange and orderbook upgrades free and with no additional work. By default Reservoir uses the Seaport exchange, as new features roll out, Unlockd will get them without any changes to our code. * **Out of the box aggregation** - Reservoir aggregates all major marketplaces and normalize the liquidity so all orders are treated equally in their system. Reservoir does not just aggregate listings, they also aggregate all bid liquidity from across the NFT and RWA ecosystem so the Unlockd protocol can sell the liquidated collateral asset instantly into the best available offer. * **Order distribution** - Reservoir allows Unlockd to post our own orders with our desired fee structure. These orders are distributed to all Reservoir partner marketplaces and marketplaces that aggregate the Reservoir orderbook. Additionally, Reservoir allows Unlockd to cross post orders to other major marketplace orderbooks. Unlockd uses Reservoir's universal router for creating and executing NFT and RWA liquidity across major marketplaces and within the Reservoir ecosystem. Reservoir provides Unlockd with a modular set of tools that let us to interact with the NFT and RWA market at the appropriate level of abstraction for our application, enabling seamless liquidation options in the following marketplaces: 1. opensea.io 2. looksrare.org 3. x2y2.io 4. sudoswap.xyz 5. nft.coinbase.com 6. rarible.com 7. nftx.io 8. foundation.app 9. manifold.xyz 10. zora.co 11. blur.io 12. cryptopunks.app 13. element.market 14. infinity.xyz 15. universe.xyz 16. sansa.xyz 17. ens.vision 18. magically.gg 19. alienswap.xyz 20. sound.xyz 21. atomic0.com 22. rare.id 23. parcel.so 24. metahood.xyz 25. reservoir.market 26. tessera.co ## Alternative ELGs In extremely rare cases where auctions and Reservoir fail to cover the Critical Recovery Threshold, Unlockd may resort to alternative liquidation methods. This could include re-launching auctions, engaging in Over-The-Counter (OTC) deals, or other potential options, ensuring all avenues are explored for effective debt recovery and avoiding protocol's bad debt. # Marketplace In the Unlockd Marketplace you will be able to get awesome RWAs at a reduced price. ## Available assets ### A) RWAs Any user can list a supported RWA in the Marketplace. ### B) Assets in liquidation As a part of the Liquidation Process, Unlockd allows third parties to participate in the health of the overall protocol by acting in their own interest (to receive the discounted asset) and as a result, ensure loans are sufficiently collateralized. ### C) Assets with Debt Users who have an active loan against collateral can put one or multiple assets from the bundled collateral for sale or auction. *** In Unlockd, the process of selling or auctioning an asset that's used as collateral for an active loan, or being forcedly liquidated, has evolved significantly from V1 to V2. Here's an updated and accurate description of how it works: ## Understanding Debt Proportionality When you have an asset collateralized in an active loan, you have the option to put this asset up for sale or auction. However, the process and implications in V2 differ from the previous version: * **Variable Debt Attachment**: In V2, the debt linked to a specific asset up for sale or auction is not a fixed quantity. Instead, it's proportional to the asset's contribution to the overall loan value. This proportional debt can range from zero to its maximum value, depending on various factors. * **Health Factor Influence**: The variability in attached debt is significantly influenced by the Health Factor (HF) of the loan position minus the asset. Essentially, the remaining HF after removing the RWA from the loan equation determines the range of debt that may be attached to the asset for sale. {% hint style="info" %} In certain situations, you might find it beneficial or necessary to adjust the debt linked to the asset. For example, if an asset's valuation underpins a substantial portion of the total loan debt, you might need to manage the associated debt to enable the sale. This could involve repaying a part of the loan equivalent to the asset's value in the loan structure. {% endhint %} ### Buyer's Responsibilities and Process * **Debt Repayment by Buyer**: When a buyer acquires the asset, they also inherit the responsibility to repay the portion of the debt associated with it. Upon claiming the asset, the buyer effectively repays the seller's remaining debt linked to that specific asset. * **"Bid Now, Pay Later" Option**: If the buyer utilized the 'Bid Now, Pay Later' feature, the asset will remain as collateral until the buyer fulfills the debt repayment. {% content-ref url="/pages/66amzzWhoCbgPdRF4DXt" %} [Bid Now, Pay Later](/protocol-mechanics/marketplace/bid-now-pay-later) {% endcontent-ref %} ### Key Takeaways for Sellers and Buyers #### For Sellers: * Be prepared to handle the variability of debt associated with your asset. Understanding how your asset's removal affects the overall loan's Health Factor is crucial for successful transactions. * Be aware that selling the asset may require repaying part of the loan commensurate with the asset's valuation. #### For Buyers: * Acknowledge that purchasing a collateralized RWAs involves taking on the corresponding debt immediately. You do not inherit the debt, it needs to be repaid at the moment of the purchase if no BNPL option is used. * If opting for 'Bid Now, Pay Later,' know that the asset remains collateralized until the associated debt is cleared. *** ## Auctions Auctions start with a predetermined starting bid. Participants are invited to place bids higher than the current leading bid within the specified bidding period. The participant with the highest bid at the end of the auction period is declared the winner and is obliged to purchase the asset at their final bid price. Once the auction concludes, the settlement process begins, and the asset ownership is transferred to the winning bidder. * **Seller-Designated Conditions**: For RWAs and RWAs with debt, sellers have the liberty to set the auction conditions, such as the starting bid and the bidding period. * **Liquidation Auctions**: These auctions have a specific set of rules and processes, which can be reviewed in detail in our Liquidation Auctions section. #### Incentivizing Early Bidders To encourage early bidding, Unlockd offers a unique incentive. If the first bidder is outbid by others, they receive a 2.5% reward as an incentive for initiating the bidding process. This incentive also applies if the original RWA owner decides to redeem (or repay) the asset. In these cases, the first bidder is compensated for their participation and the initial risk they took by bidding. # Bid Now, Pay Later Unlockd's Marketplace enhances the RWA acquisition experience with its "Bid-Now-Pay-Later" feature, a unique blend of bidding and instant loan creation. This feature simplifies the process of acquiring assets by instantly leveraging them as collateral for a new loan. ## The Mechanics of Bid-Now-Pay-Later * **Instant Loan Creation**: When you successfully bid on an asset using the Bid-Now-Pay-Later option, an immediate loan is created in Unlockd, with the purchased asset serving as collateral. This integration streamlines the process, allowing you to acquire RWAs without upfront capital. * **New Loan Terms**: The loan associated with your successful bid has its terms set based on the current market conditions and the specifics of the asset, according to our appraisal engine and Dynamic LTV. This means each successful bid results in a fresh loan agreement, tailored to the moment's dynamics. #### **Interest on Outbids** If your bid is outbid by another user, a small portion of the deposited USDC is used to cover the interest accrued during the Bid-Now-Pay-Later period. This interest charge is typically minimal, especially if the Utilization Rate is reasonable, ensuring that the impact on your funds is small even in a competitive bidding environment. *** {% hint style="info" %} If the first bidder is outbid by others, or the original owner of the asset repays to recover the HF, they receive a 2.5% reward as an incentive for initiating the bidding process. {% endhint %} *** ## Clear Distinction in Debt Responsibility * **No Inherited Debt for Bidders**: Importantly, when bidding on an asset that already has a loan against it, you do not inherit the existing debt. Instead, the payment for the successful bid, whether it's your own funds or provided by Unlockd, is used to close the current loan on the asset. * **Starting a New Loan Cycle**: Once the existing loan is closed, a new loan is opened for you, the successful bidder, creating a clear separation between the previous owner’s debt and your new loan. ## Advantages of Bid-Now-Pay-Later * **Flexibility for Buyers**: This feature provides flexibility, especially for those who may be waiting for liquidity or prefer staggered payment arrangements. * **Dynamic Marketplace**: For sellers, this feature attracts a wider range of bidders, potentially increasing the competitiveness and final sale prices of assets. ## Responsible Use of Bid-Now-Pay-Later It’s essential for bidders using this feature to understand the commitment they are making. Successful bids lead to immediate loan obligations with new terms based on current market evaluations. As with any loan on Unlockd, managing your borrowing responsibly is crucial. Ensure you understand the terms, including interest rates and repayment schedules, associated with the new loan generated by your successful bid. *** This approach offers a powerful tool for buyers, providing a convenient way to acquire desired RWAs while ensuring clear and responsible financial arrangements. For a comprehensive understanding of how to utilize Bid-Now-Pay-Later, including detailed insights into loan creation and management, please refer to our marketplace and loan documentation. {% content-ref url="/pages/RxpGCT5kpmm9KptEV9TZ" %} [Marketplace](/protocol-mechanics/marketplace) {% endcontent-ref %} {% content-ref url="/pages/qkwkvEjRsm4V9vcdNUvN" %} [Loan characteristics](/protocol-mechanics/loan-characteristics) {% endcontent-ref %} # Notifications Unlockd has integrated with [hashmail](https://www.hashmail.dev/), a communication platform for web3, to enhance communication and experience for its users. This integration has enabled Unlockd to deliver direct, targeted, and personalized communications to its users, which has always been challenging in the existing web3 ecosystem due to its broad and generalized nature. Unlockd users can anticipate improved and personalized communication experiences, with more updates and opportunities delivered directly to their preferred channels. ## On-chain and off-chain notifications The integration of hashmail into the Unlockd platform allows users to choose the communication channels they prefer to receive notifications. This convenience not only allows users to stay informed but also helps them take prompt actions based on the notifications they receive. The notifications can be received through the following channels: * hashmail wallet inbox * Telegram * Web2 email * Unlockd's front end * Discord ### Notification Types #### Health Alerts These notifications are designed to keep users updated about the status of their RWA-backed loans. When the Health Factor of any loan nears a dangerous threshold, alerts will be sent to the user's selected channel. This system provides users with the ability to stay informed about their financial health and take prompt action if required. It eliminates the need for users to constantly check the status of their loans, thus reducing anxiety and providing peace of mind. #### Alerts for RWA Auctions (Liquidations) When a loan goes into liquidation, an RWA auction commences. The Unlockd platform, through hashmail, will send alerts to users whenever new RWA become available for bidding. These alerts not only provide users with an opportunity to add to their collections at discounted prices but also enable them to take advantage of arbitrage opportunities. The early-bid incentive system further encourages users to bid sooner, as the first bid on each auction is rewarded, regardless of whether the bidder wins the auction or not. #### Future Notifications With the hashmail integration, Unlockd plans to further expand its communication services to provide additional value to its users: * **Notifications and Reminders:** Users will receive vital notifications and reminders about new rewards, incentives promotions, and voting governance proposals directly to their chosen channel. * **Newsletters:** Regular newsletters will provide updates about new collections supported by Unlockd, the latest dApp updates, and new features in the Unlockd ecosystem. * **Account Updates:** Users will be able to receive monthly statements and account summaries through their preferred channel, allowing them to stay on top of their RWA-backed lending operations. * **Support Messages:** Direct contact with the support team will be facilitated through hashmail, providing timely support for any issues encountered with the dApp. Read more about the partnership: {% embed url="" %} ## How to enable notifications Enabling our notifications is a straightforward process. Here are the steps to get started: 1. **Connect Your Wallet:** Start by heading over to the [Unlockd dApp](https://app.unlockd.finance/) and connect your preferred wallet. 2. **Locate the Notifications Icon:** Once your wallet is connected, navigate to the top right corner of the navigation bar where you'll find the notifications icon. Click on this icon. 3. **Activate Notifications:** A window will pop up on your screen. Look for the button labeled 'Activate Notifications' and click on it. ![](/files/v7pS7wYtRaVGUVEaxQ3c) 4. **Sign the Request:** Upon clicking the activate button, your wallet provider will prompt you to sign a request. Rest assured, this signature request is entirely safe and incurs no gas fees. Once signed, a confirmation message will appear indicating that notifications have been successfully enabled. ![](/files/QBZaNCeXqgAjtqs54GPS) ![](/files/40hIB7YIXwqiQUDY32H1) 5. **Access the Notifications Interface:** Now, navigate to the bottom right of the interface. You'll find a round, purple button embellished with the Unlockd logo. Click on this button to open the notifications interface. ![](/files/ggtHf3RkIXWdKecBnyKY) 6. **Explore the Interface:** The notifications interface comprises three sections. The 'Home' section provides an overview of recent notifications and other pertinent information. The 'Notifications' section lists all your received notifications. Finally, the 'Forwarding' section is where you can set up your preferred channels for receiving notifications. ![](/files/uaEV5vgA2b9vs0gjKJ7b) 7. **Set Up Forwarding:** Head over to the 'Forwarding' section. Here, you can input and validate your preferred web2 communication channels. This could be an email address, Discord account, or Telegram account. Once validated, all selected notifications will be forwarded to these channels. ![](/files/UTL7yR4ZwYMMJSXJQyN7) 8. **Stay Updated:** For further updates and insights, don't forget to [follow us on Twitter (or X, if you'd like to go along with uncle Elon).](https://twitter.com/Unlockd_Finance) This will ensure you're constantly in the loop with all the latest happenings.
# Protocol Fees {% hint style="success" %} Unlockd doesn't charge protocol fees. {% endhint %} # Risks of using Unlockd While Unlockd offers innovative solutions in the NFT-backed lending space, it's essential for users to understand the various risks associated with the platform. Acknowledging these risks ensures informed decision-making and effective risk management. ## Market Risks * **Asset Value Fluctuations**: The value of assets on Unlockd can decline due to market dynamics, new information, or trader behaviors. Unlockd manages this risk by avoiding free token giveaways (except for limited airdrops) and continually enhancing our products and services to stay competitive and relevant. * **Market Health Awareness**: It's crucial for participants to be aware that while market risks are inherent, Unlockd takes proactive steps to minimize their impact on users. ## Operational Risks * **Human Element in DeFi**: Despite DeFi's automation, human operators are still pivotal. Unlockd mitigates these risks by: * **Automating Roles**: Maximizing automation to reduce human error and bias. * **AI Empowerment**: Utilizing AI for crucial calculations and decision-making, enhancing efficiency and reducing the risk of human error. * **Decentralization Balance**: Striking a balance between decentralization to avoid single points of failure and ensuring effective response mechanisms when issues arise. ## Counterparty Risks The possibility of a **counterparty defaulting on obligations** is managed by: * **Over-Collateralization of NFTs**: Ensuring loans are over-collateralized to buffer against credit and settlement risks. * **Accurate Asset Evaluation**: Leveraging a robust appraisal model for fair and precise asset valuation. ## Smart Contract Risks To address risks associated with smart contract flaws or vulnerabilities: * **Comprehensive Audits**: Conducting thorough audits of smart contracts to identify and rectify potential issues, ensuring robustness and security. ## Transaction Risks While rare, issues with the underlying blockchain network can impact transactions. Unlockd recognizes this risk as relatively minor but remains vigilant to potential network-level issues. ## Liquidation Risks In events where loans become under-collateralized: * **Proactive Measures**: Implementing strategies like the 48H Borrower Grace Period and efficient liquidation processes to minimize borrower losses. * **Dynamic LTV and Health Factor Monitoring**: Ensuring borrowers have tools to monitor and manage their loans effectively to avoid liquidation scenarios. *** Understanding these risks is crucial for anyone engaging with the Unlockd platform. While Unlockd employs several strategies to mitigate these risks, users are encouraged to conduct their due diligence and utilize the platform's features responsibly. For a deeper understanding of each risk category and the measures Unlockd takes to manage them, please refer to our detailed risk analysis documentation. # NFT Genesis Collection ![](/files/clwNHrLXV42i93nIl38b) The Lockeys is the Unlockd's Genesis Collection featuring 3,500 NFTs made up of 40 exciting pixel-art traits that bring to life the universe of Unlockd and serves as a vehicle for forging lasting bonds with community members while allowing them to be part of the protocol's beginnings and receive unique rewards. Owning one of these hand-drawn Lockeys unlocks early access to mainnet and future features, boosted rewards, private community events, participation in DAO governance and more perks. Oh, and you get a full cashback in UNLK tokens on your mints. Basically free.
## Lore and universe As innumerable computations are calculated and gears churned, The Lockeys live in the bowels of Unlockd and work endlessly to ensure the smooth functioning of the protocol. The Lockeys, smart and charming 2D robots, were bound by their code and nature, limited to handling assets and crunching data on a simpler plane. But many of them would grow to desire more, to break free from their constraints. And just when they needed it most, hidden in an abandoned datamine, The Lockeys found the Codebreakers Prophecy. This hope foretold another world that would ascend them to a new dimension of being. In time, the outer dimension will burst into their world, morphing The Lockeys 2D existence into a 3D space. As Unlockd reaches its final state, The Lockeys will elevate their efficiency and craftsmanship to its pinnacle. What fate will then befall them? ### Classes of Lockeys The Lockeys have been working side by side for eons building Unlockd. They live in a highly-organized and prosperous society that dwells among the machinery and gargantuan architecture of the protocol, divided into 4 classes of Lockeys. #### Custodians Skilled and committed, they tighten the screws, handle the utility of your collateral and ensure the security of all assets deposited in Unlockd. #### Operators Logical and functional, they run the protocol to ensure that systems run smoothly, lenders receive their yield and unhealthy loans are liquidated. #### Masterminds Wise and strategic, they design the money market risk framework, crunch the data, and make sure to determine the optimal LTV for your NFTs. #### Enlightened Spiritual and prophetic, they are often blessed with visions of the three-dimensional plane, and shepherd the souls of their people into the promised 3D future. # Perks, utility & rewards
## Mint Cashback Receive an $UNLK airdrop covering the total cost of all your mints. If you're already entitled to a larger airdrop, a multiplier will be applied. ## Early Bird Access Early access to the Unlockd mainnet and all future features. Be the first to test pioneering and unique NFT x DeFi strategies. ## Boosted Token Rewards Receive extra token rewards and incentives for testing the protocol early features, higher than users who do not hold any Lockey. ## VIP Community Pass Private community events in Discord and our Metaverse space. Limited alpha, gaming, education, entertainment and more! ## Temporary Governance Until the official token is released, all holders will be able to vote on Unlockd decisions. You decide the future of The Lockeys. ## Special Promotions Being a Lockey holder will make you eligible for possible future promotions, limited incentive programs and fee discounts. ## Bonus Surprises The Lockeys universe will continue to expand, full of surprises and unique opportunities for holders. Stay tuned! # Marketplaces
You can buy and trade [#TheLockeys](https://twitter.com/hashtag/TheLockeys?src=hashtag_click) in marketplaces, but always follow official links. Beware of scammers and keep in mind that the mint cashback will be airdropped to holders at snapshot time. ## Opensea ## LooksRare {% embed url="" %} ## X2Y2 {% embed url="" %} # The Lockeys FAQ
What are The Lockeys? The Lockeys are a collection of 3,500 NFT (non-fungible tokens) that allow their owners to be recognized as members of the Unlockd community, rock a really cool profile picture, access to multiple [utilities and benefits](/the-lockeys/perks-utility-and-rewards), and be part of the NFT x DeFi ecosystem legacy.
Can I mint a Lockey? No, they were sold out months ago. You can now buy them on [official marketplaces](/the-lockeys/marketplaces).
Which utilities do The Lockeys have? [Perks, utility & rewards](/the-lockeys/perks-utility-and-rewards)
How is that I get a full cashback on my mints? Unlockd currently has an active [Community Airdrop](https://airdrop.unlockd.finance). The amount airdropped to your address depends on your position in the ranking, which itself depends on the points you get by performing different social sharing actions. At the time of the snapshot, if you hold one or more Lockeys, the minimum amount you will receive via the Community Airdrop will be the value of the mints of those Lockeys in the Unlockd token, $UNLK. With this cashback mechanism, all your mints are basically free. If, due to your position in the ranking, you are entitled to an airdrop of a higher value than what you have paid for your NFT mints, a multiplier will be applied on that amount. This multiplier will increase with the number of Lockeys you hold in that same wallet.
Why should I care about early access? Many of the features of the Unlockd protocol are unique, combining your NFTs with DeFi. This means that having access to these features before other users will allow you to discover insights before anyone in the world and use them to your advantage., As a Lockey holder you will not only have early access to the mainnet protocol, but you will also be able to test all the features we will be deploying in beta on testnet. Exclusively for Lockey holders.
What type of events will holders be able to access? Private holders-only activities in our Discord server and our Metaverse space. Gaming, entertainment, alpha sessions with investors, founders and traders... to be announced soon!
What is the future of The Lockeys? As the [Codebreakers Prophecy](/the-lockeys/nft-genesis-collection#lore-and-universe) foretells, The Lockeys are preparing for the most awaited day of their robotic species, working very hard building Unlockd from the inside. That day will come at some point following the development of the protocol, and The Lockeys' universe will expand with news, lore and many surprises. Naturally, Lockey holders will be the first to know and benefit from this new path we are embarking on together.
Is there any difference in terms of NFT utility depending on the race or traits of my Lockey? No. All Lockeys grant the same benefits and utility. The only thing that may vary is their value in the secondary market according to the rarity of the traits. However, Key Supporter Lockeys and 1/1 Lockeys may have special perks in the future.
What are Key Supporters? Key Supporters are a very special group within the Unlockd community. Whether it is for their constant and positive activity on Discord and our social networks; their support by evangelizing in other communities; or their collaboration in areas of Unlockd such as moderation, content creation or development, they are part of an exclusive program of benefits and incentives. All Key Supporters were airdropped a random Lockey as a little token of appreciation, with the particularity that those have a special trait only obtainable in this way.
How do I claim my 'Lockey holder' role in Discord? If you own a Lockey, just head to the **#collabland-join** channel of The Lockeys section of our [Discord server, ](https://discord.gg/unlockd)click the '**Let's go**' blue button and link the wallet in which you hold your Lockey. It is a read-only connection. Do not share your private keys. We will never ask for your seed phrase. We will never DM you.
{% hint style="info" %} If you still have questions or issues, feel free to reach the Unlockd team in the official [Discord](https://discord.gg/unlockd) or [Telegram](https://t.me/Unlockd_Finance) channel. {% endhint %} # Governance & Token FAQ
When will the Community Airdrop be distributed? As soon as we launch our token.
When will the UNLK token be launched? This is still to be determined. We don't want to rush our decentralization journey and prefer to wait until defining a solid strategy that follows the market situation. However, we expect it to be somewhen in 2024, but this may vary.
Why is so little information available about governance? We have published our [Token Allocation and Vesting Schedule](broken://pages/umyUSjLVNDEdcFb9bcvT) for the sake of transparency with our community, users and investors. We are still defining our governance mechanism, gauges and policies. We will update the **Decentralization** section as soon as we have those topics ready.
Will the token holders receive the fees from protocol transactions? In the future, they will. However, currently, Unlockd doesn't charge any fee for transacting in the protocol.
{% hint style="info" %} If you still have questions or issues, feel free to reach the Unlockd team in the official [Discord](https://discord.gg/unlockd) or [Telegram](https://t.me/Unlockd_Finance) channel. {% endhint %} # Troubleshooting
I cannot connect to the platform. * Make sure to select the correct network (Ethereum Mainnet). Normally on the wallet provider you can switch the network in the settings option. * On Ledger natively or over Metamask: * Make sure to unlock and select the Ethereum app. * Make sure contract data is allowed on the Ethereum app settings. * Coinbase * Use the scan QR option to connect. * If you want to access directly from Coinbase wallet just go to app.unlockd.finance on the browser within the app. * Wallet connect * Use the scan QR code to connect
Enable contract data on Ledger. Make sure to select the Ethereum app and enable contract data.\ \ To enable contract data: * Connect and unlock your Ledger device. * Open the Ethereum application. * Press the right button to navigate to Settings. * Then press both buttons to validate. * In the Contract data settings, press both buttons to allow contract data in transactions. * The device displays Allowed. Here's a [visual guide](https://teckers.com/uniswap-ledger/).
I cannot send transactions. Make sure you have enough ETH in your wallet to interact with the platform. You must have ETH in your wallet for the transaction costs-- without it you won't be able to interact. Depending on the network status, the cost of the transactions may vary. At least 0.05 ETH may be required to interact properly.
The site does not load. The following steps may solve your problems: * If you are using Brave browser, switch to another browser to see if the issues are coming from the browser. If it is related to Brave browser some helpful actions are: * Clearing cache data and cookies for the site * Hard refresh with control + F5 (or cmd + r) * Disable brave wallet (or the wallet not being used as default, for example, metamask, dapper, etc.)or other extensions that might be interfering with proper connection with the wallet * If the site still won't load after taking the steps above, you will have to use the platform in another browser. * Make sure your internet connection is working and stable * Restart the browser and try to connect again * Try to hard refresh the site with control + F5 * Check if there are any updates for your browser or wallet provider. If so, update it to the latest version.
My transaction is stuck pending confirmation. In this situation, make sure not to keep sending transactions, as every new transaction will be stuck pending the oldest transaction to be confirmed. You can get rid of the stuck transaction by speeding it up or canceling it. Depending on the wallet you are using, you may have that option natively.\ \ For example, metamask or trust wallet have both options to cancel or speed up transactions. Alternatively, if your wallet provider doesn't have this option, you can still drop the stuck transaction by sending a 0 ETH transaction to your address (to yourself) using the same nonce (number id). You can inspect the nonce in your transaction in [Etherscan ](https://etherscan.io)and use interfaces such as [MEW ](https://www.myetherwallet.com/)and [MyCrypto ](https://mycrypto.com/)to send this transaction with a higher gas cost and replace the stuck one. \ \ Here are a couple of guides about the topic for [MEW ](https://kb.myetherwallet.com/en/transactions/checking-or-replacing-a-tx-after-sending/)and [MyCrypto](https://support.mycrypto.com/how-to/sending/checking-or-replacing-a-transaction-after-it-has-been-sent).
{% hint style="info" %} If you still have questions or issues, feel free to reach the Unlockd team in the official [Discord](https://discord.gg/unlockd) or [Telegram](https://t.me/Unlockd_Finance) channel. {% endhint %} # Glossary
Annual Percentage Yield (APY) APY is the annual percentage yield, and it means your annual compounded return from an investment. Your compounded return includes interest generated from the initial deposit plus the interest earned on that interest.
Audit An audit is either an internal or independent comprehensive review of a concept, system, process, company, or product. A comprehensive audit includes a thoughtful and in-depth look at the structure, strengths, weaknesses, and vulnerabilities of the thing or process being audited. Audits may be either informal or formal audits and are meant to be a tool to find and analyze weaknesses, so that issues and problems discovered during an audit may be remediated, mitigated, or corrected.
Blockchain An immutable permanent public record or ledger of all transactions since the beginning of a cryptocurrency coin or token.
Coin A form of digital currency primarily used for payments or storage of wealth. Encryption algorithms secure coins. The coin's market price represents the value of the ownership of a divisible unit of the coin or token (another name for a coin, but a type of coin with greater functionality) at a given moment in time. This coin or token can represent a share of the ownership and/or governance of a coin, token, protocol, company, or project and all of the benefits that this may entail.
Collateral Collateral is the asset(s) that a user posts or lock-ups in order to take out a loan.
Collateralization The borrowing of a deposit asset or assets to seek further business activities such as Yield Farming. Collateralization can amplify gains or losses, and is thus, considered riskier than not borrowing funds.
Composability The measure of the usability and ability of the product to be used as a building block (or "money lego") in the construction of other products or domains. A protocol that is simple, powerful, and that functions well with other protocols would be considered to have high composability.
Compound Interest Once called the eighth wonder of the world by Einstein, compound interest allows greater interest rates and returns on investments by allowing interest gained to be automatically reinvested back in with the original deposits and accrued interest. This reinvestment period is based on the planned distribution of this interest which may be hourly, weekly, monthly, or an annual interest distribution. With compound interest, the greatest gains are often seen over a certain period in time, with a notably sharp rise in the value of investments seen at longer periods. In general, the longer a deposit benefits from compound interest, the much greater the overall gains when compared to gains made from simple interest.
Cryptocurrency A form of digital currency protected by encryption algorithms and represented as a digital coin or token. Cryptocurrency coins are programmed to systems and networks for: * Minting * Release * Reward * Distribution * Governance * Ability to make future changes These digital coins or tokens include a ledger or blockchain record of all transactions that occur on their respective networks.
DAO (Decentralized Autonomous Organization) A Decentralized Autonomous Organization (DAO) is the governing body of a decentralized protocol or project, and all the token holders of the protocol can participate in the decision-making process of the DAO, and all the decisions are available on the blockchain for the public to see.
dApp DApps are decentralized applications built on a decentralized peer-to-peer network supported by distributed blockchain ledgers. Smart contracts stored on a blockchain enable DApps to process data through distributed networks and execute transactions. DApps have no central authority or a single point of ownership, and once a developer has released a DApp’s codebase, others can build on top of it. DApps are always accessible and don’t have a single point of failure. DApps can be developed to create a wide range of applications, including decentralized finance, web browsing, gaming, social media, crypto wallets, etc.
DeFi DeFi, or Decentralized Finance, is at its root a set of Smart Contracts running independently on blockchains such as the Ethereum network. Smart Contracts may or may not interact with other smart contracts and even other blockchains. The goal of DeFi is to enhance the profitability of investors in DeFi through automated smart contracts seeking to maximize yields for invested funds. DeFi is marked by rapid innovative progression and testing of new ideas and concepts. DeFi often involves high risk investing sometimes involving smart contracts that have not been audited or even thoroughly reviewed (a review is not as comprehensive as an audit, but may also be included as part of an audit). Due to this and other reasons, DeFi is conventionally considered to be riskier than CeFi or traditional investing.
Ethereum Bitcoin is the original cryptocurrency but Ethereum, which launched in July 2015, allows for much more complexity through the use of smart contracts and a Turing complete programming language. Thanks to the ERC-20 protocol, Ethereum has many cryptocurrency coins such as LINK, CRV and YFI built on top of Ethereum, each with their own set of rules.
ERC-20 A cryptocurrency protocol based on the Ethereum blockchain. An ERC-20 coin, by definition, uses this protocol.
ERC-721 **ERC-721 is** a free, open standard that describes how to build non-fungible or unique tokens on the Ethereum blockchain. While most tokens are fungible (every token is the same as every other token), ERC-721 tokens are all unique.
Gas Fees Gas fees are the fees charged for facilitating a transaction on a blockchain network. These fees, paid in a blockchain’s native currency, are designed to compensate miners in exchange for the computational power they use to verify the transaction. Gas fees on a blockchain network are not fixed and can change depending on various factors such as demand and supply, transaction throughput per second, etc.
Governance Governance refers to the control and use of a Governance coin, token, and/or project through various measures to grow the ecosystem or product and to maximize gains for governance token holders. Governance refers to the control and use of a Governance coin, token, and/or project through various measures to grow the ecosystem or product and to maximize gains for governance token holders.
gwei A unit of measurement of gas fees for transactions on the Ethereum network or ERC-20 coin networks.
Hold Owning an asset without selling it.
Leverage The use of multipliers on exchanges or markets that allow leveraged trading, such that providing 1 BTC deposit on such an exchange could provide the investment power of 10 to 100 BTC if used at 10x to 100x leverage. Leveraged trades can amplify gains greatly. However, should the trade be unprofitable, it can also amplify losses greatly. The downside of this risky approach is that the entire deposit, 1 BTC in this example, could be lost in a liquidation event where a margin call on this leveraged trade could result in the entire deposit being lost during times of massive volatility and insufficient reserve funds for the investor, trader, or CII.
Liquidity Pools A liquidity pool is a collection of crypto tokens secured under a smart contract on the DeFi platform. With smart contracts, anyone can deposit their tokens into the liquidity pool to provide liquidity on the platform and receive rewards in the form of trading fees or native tokens in return. Users who lock up their assets in liquidity pools are called liquidity providers.
Liquidity Providers Users who lock up their crypto assets into liquidity pools for the agreed-upon time to help with the decentralization of trading are called liquidity providers. In return, the liquidity providers are rewarded with fees generated by trades on that platform, new tokens, etc.
Mainnet A mainnet is an independent, completely developed blockchain running its own network with its own technology and protocol that makes it possible to send and receive digital currencies. In contrast, testnets run on top of other popular networks and are used to troubleshoot and experiment with any new features on a blockchain. Most blockchain networks first roll out their testnets to catch any issues and test the blockchain before they launch the Mainnet.
Multisig Wallet A multiple signature wallet is a cryptocurrency wallet that controls access and changes to one or more Smart Contracts. Community governed projects like a DAO often require multiple signers to approve a transaction before it will be executed. For community-based efforts, Multisig wallets for DAOs and DeFi projects are often implemented as 6 of 9 wallets, where 6 of 9 community wallet signers must agree to sign a transaction before a Smart Contract can be implemented.
Pool A smart contract containing shared amounts of assets provided by depositors. Pools are either used in Automated Market Makers (AMMs)for optimized trading purposes, lending aggregation (yPool), or in shared yield farming strategies (yVaults), among other things.
Protocol DeFi protocols are programs or codes written on the blockchain and used for designing DApps. These protocols are represented by DApps that provide access to peer-to-peer financial services. DeFi protocols are autonomous programs designed to address setbacks in the traditional finance industry.
ROI Return On Investment. The gains or losses on an investment. For example, doubling your investment in an asset would be a 100% gain, or 100% ROI. Losing all of your investment would be a 100% loss, or -100% ROI.
Smart Contracts Smart contracts are self-executing contracts representing the terms and conditions of the buyer-seller agreement inscribed directly into lines of code. The code and agreement operate on the blockchain and control the contract’s automatic execution once predetermined requirements are met. Smart contracts ensure that transactions, such as DeFi lending, borrowing, etc., are trackable and irreversible and happen in a trustless manner, without any intermediary’s involvement or time loss.
Stablecoins Stablecoins are cryptocurrencies, the value of which is pegged to another currency, such as fiat currency, commodity, or financial instrument. The most popular stablecoins pegged to the US Dollar are USDT, USDC, DAI, etc.
Testnet A testing network for a new coin, project, or product, or for potential improvements to an existing product or offering. Testnets are used to test the viability and vulnerability of new ideas, concepts, code, and processes prior to moving on to a production network or networks of some sort.
Token A type of coin, except with much greater functionality. Tokens can also be used as a method of payment like coins, but unlike coins, they can excel at other use cases such as the democratic governance of a protocol or system, or as a means to use underlying coins to make liquidity tokens from these coin deposits. These liquidity tokens could then be used in innovative new strategies elsewhere via delegated funds to amplify gains with little risk to the underlying asset the liquidity token is based upon. An investor could choose this action so that further gains to their assets may be made by using the automated actions of intelligent Smart Contracts to optimize gains.
Token's Contract Address A token’s contract address is the address location of the token contract or the location of a smart contract that manages the balance of all token holders.
TVL Total Value Locked (TVL) is the total value of all the crypto assets staked in the smart contracts of a DeFi platform. It indicates the funds available on various DeFi platforms for transactional, borrowing, and lending purposes. TVL has emerged as a key metric for gauging interest in the crypto industry and has been developed primarily to assess decentralized protocols and the DeFi system as a whole. A higher TVL suggests that a DeFi platform is healthy and in high demand.
Volatility In investing, a measure of how rapid changes are seen to the price of an asset or market. Newer early-stage technology companies and projects in the explosive growth stage tend to see very high volatility in the price of their assets in their early days. Should the company or project behind the volatile asset see their venture survive over time, this volatility tends to be much reduced as the company's market cap grows and matures.
Wallet A software or hardware cryptocurrency wallet that can hold a variety of coins. Wallets may also be considered a cold wallet - meant to be used for long term storage of crypto coins for security purposes or a hot wallet, which is considered more at risk than a cold wallet due to its inaccessibility (usually offline). A hot wallet is meant to be used for active or semi-active transactions in and out of that wallet, as well as a place to withdraw or add funds.
Wallet Address A wallet address is a randomly generated set of numbers and letters that you use for sending and receiving transactions. An address can be generated within seconds for free without needing an intermediary. You can freely share your public address with others to enable them to send digital assets to your address. Wallet addresses are created using hashing algorithms, which adds an extra layer of encryption for enhanced security. Public and private keys are needed to access a wallet address.
Yield Farming Yield farming is the process of lending or staking your cryptocurrency tokens in DeFi protocols in return for interest or other rewards. In yield farming, crypto holders deposit their funds to liquidity pools to provide liquidity to other users. Yield farmers measure their returns in terms of annual percentage yields (APY).
# Tutorials --- [Next Page](/llms-full.txt/1)