OpenSky Finance is the first integrated peer-to-pool and peer-to-peer NFT lending protocol built on top of aave.com. Lenders enjoy 100% capital efficiency and borrowers can borrow instantly, can borrow flexibly and don’t face forced liquidation.
For most peer-to-pool lending protocols, lenders earn low APY and borrowers pay high APY as lenders prefer to be able to withdraw anytime.
OpenSky passes deposits directly to aave.com’s battle-tested money markets, which solves the ‘wasted deposits’ problem common in DeFi lending because lenders earn at least the basic Aave income in addition to any extra interest from Instant loans.
OpenSky borrowers are always 100% in control of their NFTs because we use time-based liquidation instead of price-based liquidation.
Most peer-to-peer protocols are not capital-efficient because lenders only earn if their loan offer is accepted and they have to continually search and bid for new loans after each loan is repaid.
OpenSky greatly enhances capital efficiency by using peer-to-pool deposits that are always earning to fund peer-to-peer loans. Loans are paid back to the deposit pool, so the lenders enjoy true passive income with OpenSky Finance.
Borrowers who own NFTs on our Instant loan whitelist (i.e. BAYC or CryptoPunks) who want to borrow immediately based on the floor price can use OpenSky’s Instant loan market.
For example, Bob owns BAYC #888 that is valued at the floor price of 100 ETH, Bob can stake his NFT and have the ETH in his wallet in less than a minute. He will pay a fixed APR and the loan term will be based on the collection term (this is a parameter that can be changed by DAO vote).
Bespoke borrowers whose NFTs are either worth a lot more than the collection floor price (i.e Alien Punk) or own NFTs on the Bespoke collection whitelists can make Bespoke loan offers based on their desired loan terms such as length, APY and loan amount.
For example, Alice owns CryptoPunk #5822 worth over 20 million USD and wants to borrow $5 million USDC for 1 month at 10% APR, she can make her Bespoke offer on OpenSky and will receive the funds in her wallet as soon as a lender accepts her offer.
Whitelisting means OpenSky will initially allow only famous NFT collections, such as BAYC and CryptoPunks to be used as collateral for Instant loans. The Bespoke collection whitelist will include the Instant loan whitelist and initially 14 other well-known NFT collections, such as Azuki and World of Women. Later, OpenSkyDAO members can vote on future NFT collection additions and deletions to dynamically adjust to market conditions and developments.
Instant loans are great for OpenSky lenders and borrowers. Lenders enjoy 100% capital efficiency and the peace of mind of knowing their funds are SAFU on Aave’s battle-tested money markets. Borrowers can stake their whitelisted NFTs and borrow instantly at a fixed APR based on the collection floor price. What’s more, OpenSky borrowers can’t be liquidated based on the floor price because OpenSky is the first lending protocol to offer time-based liquidation for peer-to-pool loans.
Most DeFi lending protocols use price-based liquidation. Normally, crypto (both FT and NFT) prices are provided in real-time to a lending protocol by an oracle, such as Chainlink. As soon as the price drops below the borrow limit, the loan is marked for liquidation and is normally sold quickly by liquidation bots that stand ready to protect the health of lenders and the lending protocol by minimizing the risk of bad debt in return for a substantial liquidation discount paid by unlucky borrowers out of their collateral. While time-based liquidation generally works well for liquid fungible tokens, such as ETH, it has not yet proven itself for illiquid and unique NFT-backed loans.
Time-based liquidation is OpenSky’s way to deal with this illiquidity problem. Basically, the way it works is the borrower borrows for a certain amount of time, say 30 days. During the 30 days, no matter how volatile the NFT price, it can’t be liquidated. Liquidation can only happen if the borrower fails to modify or repay the loan at the end of the 30 days. This protects the borrower and the lending protocol because it reduces cascading liquidation risk which could occur if many illiquid NFTs were liquidated at the same time because of a sudden drop in the collection floor price.
Yes, just deposit ETH or USDC into the OpenSky lending pools and you will earn auto-compounded passive income until you decide to withdraw.
Yes, as long as you pay the interest and modify your loan before the due date at the end of each loan term, you can borrow as long as you like.