Introducing Collateral-backed Loans

RCN users can now borrow funds by posting collateral in USDC or RCN starting at 5% APR!

Collateral-back Loans are here!

After a year-long development process — which started with the deployment of RCN Protocol v4.0 Diaspore and included the creation of new smart-contracts, an API upgrade and the implementation of a dedicated UI — Collateral-backed Loans have been released! The new feature — already available on the Credit Marketplace — introduces borrowers to RCN for the first time, allowing them to request funds by posting crypto collateral. In addition, this release makes RCN one of the first and only projects offering both DeFi and CeFi lending and borrowing features.

The Dawn of P2P DeFi

While RCN’s approach to collateralized borrowing offers similar benefits than other DeFi platforms, it differs from them in one key aspect: instead of centralizing all the users’ funds in a single pool, Collateral-backed Loans store the borrowers’ assets in each individual loan requested by them. This gives the feature several distinct qualities.

Collateral-backed Loans offer fixed interest rates without spreads between borrowing and lending APRs.

First, unlike pool-based lending alternatives, RCN’s Collateral-backed Loans offer fixed interest rates with no fluctuations during their term. This is possible because all the loan’s parameters are set by the borrower before requesting it, instead of being dynamically determined by a liquidity pool. In addition, the absence of a pool enables users to borrow funds without paying any platform-related fees and facing absolutely no spreads between lending and borrowing rates, making lending more profitable and borrowing less expensive.

However, their greatest feature is customizability: RCN’s Collateral-backed Loans give borrowers the chance to choose their borrowing and collateralization currencies, Annual Rate, amount, duration and Collateral Ratio from a series of possible values. Here are the current alternatives:

Collateral-backed Loans allow borrowers to set custom borrowing terms.

• Borrow and collateralize in USDC & RCN.
• 5 – 15% Annual Rate (APR).
• Any amount.
• 15 to 90 days duration.
• 200% Minimum Collateral Ratio (LTV).
• Withdraw and repay borrowed funds in RCN.

Learn how to borrow a loan now!

Now that Collateral-backed Loans are live you can become an RCN borrower following a few simple steps:

You can request your first loan following these steps!

1. Access the Credit Marketplace, connect your wallet and click on the Borrow section. Make sure to have funds in USDC or RCN. You can check your Wallet Balance on the upper-right side of the screen.
2. Set your borrowing terms, including the Borrowing Currency, Amount (which you will receive converted to RCN), Duration, Annual Rate and Expiration Time. If you have any doubts, you can find a description of each one of these variables next to their names. When you are done check your selected terms (including the amount you will have to repay) on the right side of the screen, click on the “Create” button and approve your wallet’s transaction. Remember that your loan will not be available for lending until you supply your collateral, on the next step.
3. After closing your wallet’s transaction dialog, wait until the blue progress line disappears. Once it’s done you will find the required Collateralization Currency (the one you haven’t chosen as the Borrowing Currency) and Amount already displayed on the screen. The default Amount represents the quantity of collateral required to reach a 200% Collateral Ratio, which is the minimum allowed initial ratio between the value of your collateral and the value of your borrowed funds. While lower amounts won’t allow you to collateralize your loan, you can choose a higher amount to decrease your chances of facing a collateral liquidation (which will happen if your Collateral Ratio drops to 150%). Once you have set an amount click on the “Confirm” button, approve your wallet’s transaction and wait until the blue progress line disappears.
4. That’s all, you’ve successfully become an RCN borrower! When a lender funds your loan its status will change from Requested to Outstanding, and you will receive your requested amount (converted to RCN) in your wallet.

Once you have requested a loan you will be able to verify its status, full event History and relevant variables by clicking on it on the My Loans section under the “Borrowed” tag. This includes its Repaid and Outstanding amounts, repayment schedule, Collateral Amount, Collateral Ratio, Current Exchange Rate and Liquidation Price (each one accompanied with a description next to its name). There you will also be able to deposit or withdraw additional collateral (even before your loan gets funded) following these steps:

You can deposit or withdraw additional collateral whenever you want!

1. Click on the “Deposit” or “Withdraw” buttons on the Adjust Collateral section.
2. Select the amount you want to deposit or withdraw and check the Adjusted Amount and Adjusted Collateral Ratio. Bear in mind that if you are withdrawing collateral the Adjusted Collateral Ratio can never be lower than 200% (you can easily set the amount to the Maximum Withdrawal by clicking on the “Max” button). Once you have set an amount click on the “Deposit” or “Withdraw” button, approve your wallet’s transaction and wait until the blue progress line disappears.
3. Done! Now you will see the updated Collateral Amount and Collateral Ratio when you access your loan on the My Loans section. You can repeat the Collateral Adjusting process as many times as you want.

As your loan’s Due Date approaches you will have to repay your borrowed amount plus interest. The repayment must be completed before the Due Date arrives, because once it does your collateral will get automatically liquidated (either in part or in full) to repay the lender. You can also repay your debt (partially or totally) even if the Due Date is not near, although that won’t reduce your interest payments. Finally, once your loan has been repaid you will be able to withdraw your remaining collateral. The following steps will guide you through the whole process:

Follow these steps to repay your loan and withdraw your remaining collateral!

1. Access your loan by clicking on it on the My Loans section under de “Borrowed” tag and click on the “Repay” button. Make sure to have enough funds in RCN to make the repayment. You can check your RCN Wallet Balance on the upper-right side of the screen.
2. Set the amount you’d like to repay in the Borrowing Currency and verify its equivalent in RCN. You can make sure to repay your debt in full by clicking on the “Repay Total” button. If you choose to pay less, make sure to pay the rest of your Outstanding Amount before the Due Date arrives. Once you have set an amount click on the “Repay” button, approve your wallet’s transaction and wait until the blue progress line disappears. After your final payment is complete your loan’s status will change from Outstanding to Repaid.
3. To withdraw your remaining collateral return to your loan, click on the “Withdraw” button and approve your wallet’s transaction. You will receive your funds in your wallet.
4. That’s it! After the whole process is over you will still be able to see your Loan on the My Loans section under de “Borrowed” tag, including its full event History and other relevant information.

If you follow these steps you’ll be able to become an RCN borrower in no time. However, if you still have any questions, doubts, comments or suggestions about the process, you can reach out for support on Telegram or via mail at helpdesk@rcn.finance.

Never miss one of RCN’s updates!

• Visit its Official Website & check the Credit Marketplace.
• Follow it on Twitter, Facebook & LinkedIn.
• Join its community on Telegram.
• Check its code on Github.
• Reach it at contact@rcn.finance & helpdesk@rcn.finance.