FAQ

Contracts

What does "Contract" mean?

An agreement between the Lender and Borrower, which starts by accepting an Offer and is followed by the Collateral deposit and Loan transfer to the Borrower (transaction ID is required as a confirmation).

What is the minimum Loan amount?

The minimum Loan amount is 50 for USDT, USDC, DAI, USDP(PAX), and the equivalent for L-BTC Liquid & WBTC.

What is the maximum Loan amount?

The maximum Loan amount is 25000 for USDT, USDC, DAI, USDP(PAX), and the equivalent for L-BTC Liquid & WBTC.

How do fees work?

After the Contract has been created, the applicable Origination fee from 0.5 to 1.5%, depending on the Contract's period (minimum 546 Satoshi), 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 Origination fee, Amount to be Deposited, and Amount to be Repaid calculated when a "to Borrow" Contract is created?

For example: the Loan amount is 10,000 USDT (price of 1 BTC is 10,000 USDT), LTV Ratio is 50%, Interest rate is 10%.

Origination fee (transaction fee included) is 1% of the Loan amount in BTC + the fixed transaction fee (txfee) of 0.0001 BTC. In this case, 1% of the Loan amount will be 100 USDT or 0.01 BTC. Adding a fixed txfee value to this amount, we get 0.0101 BTC (0.01 BTC + 0.0001 BTC).

Amount to be Deposited is calculated using the formula "(Loan Amount + Loan Amount * Interest rate) / LTV Ratio + Origination fee (transaction fee included)".

In this case, the deposited amount will be: "Loan amount of 10,000 USDT + Loan amount of 10,000 USDT * Interest rate of 10%) / LTV Ratio of 50% + Origination fee of 1% (transaction fee is 0.0001 BTC)", when converted into BTC, the Borrower needs to send to escrow: 2.2101 BTC (1 BTC + 1 BTC * 10%) / 50% + 0.0101 BTC).

Amount to be Repaid is calculated as "Loan amount + Loan amount * Interest rate". In our example, it will be 11,000 USDT (10,000 USDT + 10,000 USDT * 10%).

How much are Bitcoin transaction fees, and who covers them?

The Borrower covers both Bitcoin transaction fees to escrow and from escrow. The amount of the fee for the escrow deposing transaction is determined by the Borrower and should reflect the current state of the mempool, taking into account that the transaction is expected to receive 1 confirmation within the depositing timeframe. The value of the Bitcoin release & refund transaction fees is set to a medium level according to the Bitcoin network estimates and to the high level value in case of the Force Liquidation.

How do multisig escrow addresses work?

The escrow is a P2SH Bitcoin multisignature address, which requires 2-out-of-3 keys to sign the transaction. Each time a Contract is created between two parties, the Platform generates a unique multisig escrow Bitcoin address. The Borrower then sends Bitcoin from his wallet to this escrow, and while the Bitcoin is locked in escrow, Lender sends Cryptocurrencies to the Borrower. After the Contract period ends, Lender and the Platform use their keys to release Bitcoin from escrow, and the Borrower receives the Bitcoin Collateral back in his wallet.

How many confirmations does the deposing transaction require?

Depositing transaction requires 1 confirmation. The Contract will be transferred into the Payment stage only after the Collateral has been sent to escrow and the transaction has received 1 confirmation.

Does Lend at Hodl Hodl support SegWit?

Yes, Lend at Hodl Hodl supports SegWit in the following scope:

  • Native Bech32 SegWit addresses: send funds directly to escrow from Bech32 addresses, and receive funds directly from escrow to Bech32 addresses;
  • P2SH-P2WSH SegWit multisig escrow addresses: every multisig address on the Lend at Hodl Hodl Platform is generated in SegWit format.

What is the payment password?

The payment password is the password used to encrypt the keys that are required to generate and access escrow. From the users perspective, the payment password is used to deposit and release Bitcoin to and from escrow. Each Contract, as a unique storage of funds, requires a unique password. You will be asked to generate a UNIQUE payment password each time when engaging in a new Contract.

NOTE: Your payment password is the ONLY WAY to access your funds. If you lose or forget your payment password, there will be NO WAY to restore it, meaning you will lose access to your funds. Remember to use a unique and strong password for each of your contracts.

What's the difference between an account password and a payment password?

The account password is required to access your account and make changes to your profile.

The payment password is used to encrypt the key to an escrow address.

How do I change my payment password?

The payment password for a particular contract can only be changed by the mutual agreement of both parties. Both Lender and Borrower will be provided with the instructions to generate new Payment Passwords, thus migrating their Contract to the new escrow address.

What does Contract Migration imply?

Contract Migration is the security feature that implies manually migrating the Contract to the new escrow address by updating users' payment passwords, thus generating a new escrow address. Users have a right to optionally migrate their Contract to the new address by mutually agreeing to do so.

What do the different Contract statuses mean?

  • Pending – the initial stage, the Offer has been accepted by the counterparty.
  • Depositing – the Borrower is in the process of sending Collateral to escrow.
  • Payment – the Collateral has been sent to escrow; the Lender is transferring the Loan amount to the Borrower.
  • In progress – the Collateral is in escrow, and the Loan amount has been transferred to the Borrower's account. The Contract remains at this stage until the end of the Loan term or Early Repayment.
  • Repayment – the Borrower provided a link to the repayment transaction. Collateral remains locked in escrow.
  • Liquidated – The Contract entered the Forced Liquidation stage. Collateral is liquidated in favor of the Lender.
  • Completed – the Lender receives back the Loan amount, with interest for the entire period, and the Collateral can be returned to the Borrower. The Contract is finalized.
  • Disputed – one of the counterparties started a Dispute because of problems or miscommunication.

What are the time windows for the Platform?

  • Acceptance timeout (8 hours) – time limit for the Contract to be accepted. When the timer expires, the Contract will be canceled automatically.
  • Depositing timeout (12 hours) – time limit for the Contract amount to be deposited. When the timer expires, the Lender can cancel the Contract.
  • Payment timeout (8 hours) – time limit for the Payment to be made. When the timer expires, the Borrower can cancel the Contract.
  • Payment confirmation timeout (4 hours) – time limit for the Payment to be confirmed.When the timer expires, the Lender can start the Dispute.
  • Repayment timeout (24 hours) – time limit for the Repayment to be made. When the timer expires, the Lender can start the Forced Liquidation.
  • Repayment confirmation timeout (12 hours) – time limit for the Repayment to be confirmed. When the timer expires, the Borrower can start the Dispute.

How can I cancel the Contract?

You can only cancel a Contract at the following stages:

  • Pending stage – both – the Lender and Borrower – can cancel the Contract. After the payment window expires, the Contract cancels automatically.
  • Depositing stage – the Borrower can cancel the Contract at any time, the Lender can cancel after the timeout expires.
  • Payment stage – the Borrower can cancel the Contract after the Payment timeout expires.

What happens if the Contract is canceled?

If a Contract was canceled before the Bitcoin was sent to the escrow address, nothing happens – both parties may continue using our Lending Platform, the same as prior to beginning the Contract.

If a Contract is canceled in the "Depositing" stage, and the Bitcoin has already been sent to the escrow address or was sent after the Contract was canceled, the Borrower makes the refund directly to his Bitcoin address, which he specifies during the refund process. Refund transaction fees for delivering the Bitcoin to the Borrower's address are deducted from the amount locked in escrow.

If a Contract is canceled in "Payment" status, the Admin must confirm the refund of BTC to the Borrower. Please contact [email protected]odl.com with your credentials and Contract ID.

The Lender is not sending the funds, and the Bitcoin is locked in escrow. What should I do?

You should try to contact your counterparty in the Contract's chat. In case the Lender isn't answering, and the payment window expires, you can cancel the Contract. Please note the Admin must confirm the refund of BTC to the Borrower. Please contact [email protected] with your credentials and Contract ID.

How are Disputes resolved?

A Dispute is a Contract status that indicates there are issues that both parties are unable to resolve by themselves.

In case of a Dispute, the parties are contacted by a support manager in the Contract's chat window and given further instructions on the Dispute resolution process.

The support agent resolves the Dispute by carefully evaluating all the details of the case and might request some additional information in some cases.

After all provided information has been analyzed, the support manager decides how to During the Dispute process, Bitcoins remain locked in escrow.

Can I change my Bitcoin address when I'm engaged in a Contract?

You can change your Bitcoin address when you have to refund or release funds from the escrow.

Can I send Bitcoins to the escrow in multiple transactions or from different wallets?

You can send funds to the escrow in multiple transactions with different amounts and from different wallets.