Instalments have arrived to the Credit Marketplace! Now borrowers can choose to repay their DeFi Loans in several payments, with predetermined dates and fixed amounts. The number and value of the instalments will be defined by the loan’s total duration, with equal-amount payments being scheduled every two weeks.
Thanks to this system, lenders who fund these DeFi Loans will enjoy earlier principal and interest repayments. For example, a loan with a duration of 90 days will be fully repaid in 6 instalments, with the first one happening only 15 days after funding the loan. Both borrowers and lenders can verify the number, date and amount of these payments in the “Instalments” section of every loan’s Detailed View.
It’s important to bear in mind that these payments must be completed by the borrower before their respective due dates, or a collateral liquidation will be triggered.
How It Works
The repayment of DeFi Loans in instalments is possible thanks to a new Model within the RCN protocol v4.0 “Diaspore”, called “Fixed Instalments Method”. This system — which is also known in traditional finance as the “French Amortization Method” — divides the total debt to be repaid in several equal-amount installments, each one composed by an increasing amount of principal and a decreasing amount of interest.
In the future, Diaspore’s modular structure will enable the incorporation of new Models based on different amortization systems, such as the Fixed Principal — with a decreasing amount of interest in each payment — and the Bullet — with fixed interest-only payments and a single principal payment at the final Due Date — methods. This will increase the level of customization of the lending and borrowing processes, improving the Credit Marketplace’s user experience.
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