Gondi was founded with a singular mission and vision. We wanted to create a decentralized, capital-efficient and composable NFT credit market that offered top-of-the-line services and the single best market experience for borrowers and lenders.

The NFT finance space has grown by leaps and bounds in the past years, but remains plagued by systemic inefficiencies and predatory behavior that result in a sub-optimal experience for market participants.

Some of the issues:

• For most lenders with limited liquidity, high-value NFTs like Crypto Punks or Autoglyphs are prohibitively expensive. This excludes their access to the most stable collateral.

• Participants mostly operate in silos – there is no actual refinancing system, borrower negotiation capabilities are severely curtailed, and lender activities are limited to present open deals (with no avenue to offer a better deal to a borrower with an already existing loan).

• Poor safety measures and inadequate backstops result in events like cascading liquidations that create significant floor drops.

• There is limited flexibility in loan terms. Even if borrowers repay their loan ahead of the maturity period, they have to pay interest for the whole duration.

Gondi makes both borrowers' and lenders' lives easier, opening up the market to quicker, more effective interactions between both parties, and ensuring that loan terms are always devoid of any predatory mechanics. Gondi enables round-the-clock underwriting, refinancing, and renegotiation of loans.

Some novel features that we’re very proud of:

• Instant refinancing: We offer best-in-class refinancing options that benefit all participants. Imagine if you, as a lender, could instantly refinance any existing loan with your spare ETH.

  And what if you, as a borrower, could get more favorable terms on an outstanding loan without any action from your end?

  Gondi makes all of this possible.

• Greater lender market access and hedging capabilities: You are no longer bound by capital restrictions. Gondi allows for partial refinancing of loans (available up to 10 tranches), which means you can lend against blue-chip collections even with limited financial firepower! This also means you can create your own customized hedging strategies with partial exposure to an index of collections.

• No Oracle liquidations: Borrowers can rest easy. Unlike other protocols, Gondi loans will not be liquidated based on health factors or value thresholds. Loans against your prized NFTs have a pre-specified due date. As long as a borrower pays back the principal and the accrued interest by that date, there will be no default. Period.

• Only pleasant surprises: As a borrower, you might find that your loan terms have become magically more favorable overnight. You’ll never wake up to an unexpected liquidation notice in your inbox, or worse, discover that your prized NFTs have been repossessed at a moment’s notice. Only pleasant surprises. That’s the Gondi promise.

• Renegotiation capabilities: Lenders can continuously underwrite loans in the Gondi market, and propose new terms to any borrower (open or closed) at any time. Borrowers can receive loan renegotiation offers from both current and potential lenders, expanding their market options.

In this article, we will explore these features and more in-depth, through the perspective of a borrower and a lender on Gondi.

The Gondi Borrower Journey

Say you wish to take out a loan with your NFT (ERC-721) as collateral. Gondi gives you instant access to liquidity, and you will soon field multiple offers on the asset you wish to borrow against. You decide to accept a specific offer from Lender A:

• Principal: 10.00 wETH

• APR: 22%

• Due date: August 25 | Duration: 30 days

The collateral is transferred to an escrow contract, while the principal amount is sent to the borrower. If an origination fee (paid to the lender) were to be included, this amount is deducted from the principal and settled at loan repayment.

Pay Interest Only While a Loan is Outstanding

On Gondi, interest accrues only while a loan is outstanding. If you, as the borrower, repay the loan before maturity, you don’t need to pay interest for the full duration. This gives borrowers more flexibility in how they manage their loans, providing them an opportunity to save on interest payments. We are proud to be the first protocol to introduce this to the market, as a lot of participants have been searching for a remedy for this ailment.

Around-the-clock Refinancing Options

You are 10 days into the loan, and you wake up to find your notifications ablaze. Your existing deal with Lender A (Alice) has been refinanced, leaving you with a new deal that is objectively better in every metric imaginable.

This is Gondi’s instant refinancing feature in play. Instant refinancing allows any user to instantly become the new lender of record for an outstanding loan, given they provide better loan terms to the borrower. This requires zero effort/involvement on the part of the borrower, and is verified and executed by the Gondi system.

This was a huge market lacuna. Earlier, loan terms were limited to the offers received before a loan began; with Gondi, terms can be improved at any time while the loan is outstanding.

How do we define ‘better terms’ for borrowers? Better loan terms mean none of the following are worse than existing terms, and at least one is strictly better. Only if these conditions are met can the current terms be instantly refinanced:

• APR reduction: This mitigates the cost of interest over the loan term.

• Maturity extension: An extension of the loan's maturity duration offers the borrower increased temporal flexibility for repayment.

• Principal adjustment: The principal amount can be augmented, provided it's accompanied by a proportional decrease in daily interest.

The aforementioned margins are the following: a minimum increment of 1% for both the APR and principal, and a 10% minimum increment for the duration (expressed in whole days).

In your (the borrower’s) case, what would instant refinancing look like? When Lender B (Bob) instantly refinances the loan from Alice, the loan terms are updated to:

• Principal: 10 wETH

• APR: 22% 17%

• Due date: August 25 | Duration: 30 days | Days left: 20 days

Bob transfers 10 wETH as principal, in addition to Alice's accrued interest. This would come down to 0.0602 wETH over 10 days, placing Bob’s total refinancing cost at 10.0602 WETH.

The same loan can be refinanced continually, any number of times. Another 10 days go by, and another Lender C (Charlie) refinances the loan – for a longer duration and at a much reduced APR. The new loan terms now become:

• Principal: 10 wETH 11.00 wETH

• APR: 17% 10%

• Due date: August 25 September 15 | Duration: 30 days 50 days | Days left: 20 days 30 days

Bob accrued 0.0465 wETH over 10 days (17% APR * [10 days /365 days]).

Thus, the total refinancing total cost for Charlie is 11 wETH (the new principal) + 0.0465 wETH (Bob's interest) + 0.0602 wETH (Alice's interest) = 11.1068 wETH.

10 days later, you repay the loan.

Charlie accrued 0.03013 wETH of interest over 10 days.

You would stand to pay a total of 0.1369 wETH. Let us break down the figures:

• Principal: 11 wETH

• Charlie’s accrued interest: 0.0301 wETH

• Bob’s accrued interest: 0.0465 wETH

• Alice’s accrued interest: 0.0602 wETH

Without refinancing, you would have paid 0.1808 wETH in interest.

You saved 24.2% in interest, received an extra 1 wETH and had 20 extra days to repay the loan. It’s always a great day to be a borrower on Gondi!

On July 20, Gondi marked the first real-world case of refinancing in the NFT credit markets. Squiggle #5925 started with loan terms of 15% APR, 7 wETH principal, over 30 days. It received four instant refinancings, shifting its loan terms to 7.79% APR, 8 wETH, 43 days.

Renegotiate your Loans with the Wider Market

On most platforms, the borrower can only accept renegotiation offers from the existing lender. In contrast, Gondi provides borrowers with the opportunity to renegotiate with their current lender, as well as potential lenders who can propose new terms.

No Oracle Liquidations

With Gondi, you don’t need to keep neurotically checking your notifications for liquidation notices. There are zero scenarios in which your NFT will be liquidated as long as you repay the loan in full, along with accrued interest, before the due date.

In other NFT credit markets, liquidations can be driven by lender-initiated auctions, or triggered by loan-to-value ratios falling below a specific threshold. Gondi doesn’t depend on Oracles, recognizing the surface area for floor price manipulation on marketplaces.

The Gondi Lender Journey

Imagine you are a lender on the Gondi platform. You see open offers for a Squiggle/Archetype/Meridian, and you throw your hat in the ring. What next?

Instant Refinancing

You can offer objectively better terms and become the new lender of record with the refinancing feature.

Take the case of a borrower whose loan agreement with Lender A originally has a principal of 10 wETH and 20% APR. But, you find that your capital is limited – you have only 7+ wETH to spare. This would not be enough to outmuscle the existing terms. This is where partial refinancing comes into play.

Gondi gives lenders the ability to partially refinance loans with up to 10 tranches. Each tranche must always be at least 5% of the loan principal. To partially refinance a loan, the lender must decrease the APR by at least 1%.

You, as Lender B, partially refinance the loan with 7 wETH at 18% APR. There will now be two tranches to the loan agreement:

• 3 wETH at 20% APR provided by Lender A

• 7 wETH at 18% APR that you provided

Say another lender (Lender C) wishes to refinance 5 wETH. Since the principal must remain the same, this means that he would refinance the 3 wETH originally provided by Lender A, as well as the 2 wETH that you provided. In this case, Lender C would need to propose a minimum of 1% improvement to the lowest existing APR (18%). The outcome of this refinancing operation would be:

• 5 wETH at 18% APR that you (Lender B) hold

• 5 wETH at 17.82% APR provided by Lender C

Greater Market Access for Lenders

Take another case. In the previous example, you increased the loan amount to 40 wETH and reduced the APR to 17%. Here, the loan terms you provided are not, prima facie, better than the existing terms. This does not qualify as an objectively better deal for the borrower, so you cannot ‘instant refinance’ the deal.

But, with Gondi, you can negotiate directly with the counterparty.

Make Multiple Offers to the Same Collection/Item

Lenders can make as many active offers as they want to the same collection or item, enabling them to opt for both high LTV/high APR offers and low LTV/low APR offers.

Better Strategy Control

With partial refinancing, you can hedge your bets on the market by curating your exposure to different NFTs.

With Gondi, you can also create ‘collection-level offers’. This functions similarly to individual offers, with the difference that any NFT from that collection can accept such offers.

Gondi provides lending support for Squiggles, Fidenzas, Ringers, and other Art Blocks curated collections. Collection offers can be made on all of these.

Additionally, collection offers are created with a loan capacity budget, giving lenders more control over their strategies.

Loan Defaults

Loans with a single tranche that fail to repay the principal plus accrued interest before the due date are considered defaulted loans. In these cases, you as the lender would take possession of the collateral.

Defaulted loans with two or more tranches must undergo an auction process. The auction is a 72-hour English auction where participants openly bid against one another, with each bid required to be 5% higher than the previous one. The highest bidder wins the collateral at the end of the auction.

Protocol Fees

Protocol fees are currently set to 0%.

In the future, the community and protocol developers might choose to adjust the fees to a higher percentage. The protocol retains a portion of the accrued interest paid to lenders.

Whitelisted Collections

• CryptoPunks

• Autoglyphs

• Bored Ape Yacht Club by Yuga Labs

• Mutant Ape Yacht Club by Yuga Labs

• Ringers by @dmitricherniak

• Fidenza by @tylerxhobbs

• Squiggles by @ArtOnBlockchain

• Anticyclone by @williamapan

• Gazers by @MattKaneArtist

• Archetype by @kGolid

• Meridian by @mattdesl

• Memories of Qilin by @emilyxxie

• Doodles

• Azuki

Gondi plans to periodically add support to more collections. If you would like to see your collection supported on Gondi, please drop us a line at team@gondi.xyz.

Conclusion

Gondi’s mission is to create the most capital-efficient credit market for NFT assets. A healthy credit market is crucial for the growth of the underlying asset class by providing access to capital and accelerating innovation.

A more efficient market means borrowing is cheaper for asset owners. In turn, this increases market adoption and size, allowing lenders to deploy more capital and have larger loan portfolios. Gondi V1 and subsequent improvements are always built with an uncompromising commitment to create a more efficient credit market that benefits borrowers, lenders, and the greater Web3 community.

About Gondi

Gondi is a decentralized non-custodial NFT lending protocol engineered to create the most efficient NFT credit market.

Borrowing is cheaper for asset owners, while lenders enjoy higher capital utilization rates and improved returns. There are no automatic liquidations, and the platform enables continuous underwriting, refinancing, and renegotiation of loans.

READ MORE: All you need to know about Gondi

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