Lend at Hodl Hodl: fees explained
We will be adding some extra Liquidity in March, and we are also discounting the origination fee by 25%. Create your offers and you can expect much more activity starting next week!
Further along in this blog post we explain what fees are applicable for your deals and how they are charged.
What fees apply?
All in all, Lend at Hodl Hodl charges 2 different types of fees: Origination fee and Forced Liquidation fee (only in the case of Forced Liquidation).
The Origination fee is calculated from the initial Loan amount and varies from 0.5 to 1.5% depending on the contract period. Lending for 1 day now costs only 0.5%, lending from 1 week to 5 months — 1% and 6 to 12 months — only 1.5%.
Note, that Early Repayment & Partial Repayment do not imply any additional fees. Meaning that you can repay the loan at any point with no additional costs.
How are fees charged?
After the Contract has been created, the applicable Origination fee will be taken from the amount the Borrower locked in the multisig escrow address. The Platform charges Origination fees in Bitcoin only.
How is the interest paid?
Interest is charged to the Borrower and paid directly to the Lender at the end of the contract. See examples below.
For the Lender.
You lend 1000 USDT at 3% for 1 month, at the end of the period you will receive 1000 USDT + 3% (30 USDT) = 1030 USDT. In case you lend 1000 USDT at 3% for 5 months — you will still receive 1030 USDT by the end of the loan, since the interest rate is set for the whole period.
For the Borrower.
You choose to borrow 1000 USDT for 1 month at 3%, this means that at the end of the period you will need to repay 1030 USDT despite the fact that you may have repaid the loan earlier (in two weeks for example). In case you borrow 1000 USDT at 3% for 5 months — you will still need to repay 1030 USDT by the end of the loan, since the interest rate is set for the whole period.
If you still have any questions on fees, do not hesitate to ask us directly!
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