Borrowing FAQ

Why is Timeswap asking for NFTs approval? Is it safe?

Timeswap represents your loan (both debt and lend) positions as an ERC-1155 NFT.

Approving the request as shown in the above screenshot only allows the Timeswap smart contract to access the Timeswap (position) collection; it does not grant access to any of your other NFT collections.

In order to close your debt position, the Timeswap smart contract has to access the active NFTs.

Additionally, you could revoke access to the request using revoke.cash upon closing the loan positions.

What is the transition price?

Transition price (a.k.a. strike price) is the price point at and beyond which borrowers are expected to default, and the pool (asset) flips.

For example, an ETH-USDC pool in which users are using ETH as collateral.

When at maturity, market (spot) price > transition price, borrowers will ideally repay their USDC debt (and lenders will receive their USDC principal and interest).

Otherwise, borrowers will usually default on their USDC debt and forgo their ETH collateral (lenders will then receive ETH)

What does maturity mean?

As a borrower, maturity indicates the latest time at which you have to repay your loan.

It is not mandatory for borrowers to close their debt positions, but if their collateral value > debt taken, you should close your positions to prevent default or your locked collateral will be distributed to lenders and liquidity providers (LPs). NB: It is strongly advised for borrowers to repay their loans minutes/hours before the maturity time as the pool matures exactly at the stated time.

Is the APR fixed once I open a borrowing position?

Yes, the APR you see on the UI is locked-in upon opening a lend/debt position. There will be no changes to your loan term’s parameters until the pool’s maturity time is reached (the APR you see on the UI -- after opening your position -- reflects the APR for a new lender/borrower).

Why are there different approvals for opening and closing a borrow position?

When opening a borrow position, the approval is for your ERC-20 collateral to be locked in our isolated pool.

When closing a borrow position, the approval is for your ERC-1155 token (Collateral Claim Token) that represents your receipt for borrowing from the pool and your ERC-20 token used to repay the debt, the Collateral Claim Token will be burnt after closing your position and your collateral will be unlocked.