How Terminus Works

Terminus matches lenders and borrowers through a transparent offer book. The entire lifecycle of a loan — from offer creation to repayment — is managed by smart contracts on Starknet.

The Lifecycle of a Loan

1. Offer Creation

Either side can initiate. A lender posts a lend offer, or a borrower posts a borrow request. You specify the amount (within per-token min/max limits), interest rate, duration (within protocol min/max limits), and collateral ratio (within protocol bounds). Only whitelisted tokens can be used. You pay a small creation deposit — an anti-spam measure that's refunded when the offer is matched. You can optionally lock your funds in escrow to guarantee availability, set an expiry date, and add a per-offer whitelist so only designated addresses can match.

2. Matching

The other side browses available offers and picks one. Locked offers show a badge — they guarantee the funds are there. Offers with a whitelist can only be matched by whitelisted addresses. Lending vaults (ERC-4626) can pool capital and match offers collectively. Once matched, the loan begins immediately.

3. Loan Activation

All terms are fixed on-chain: principal, interest, collateral, start time, and maturity date. The principal goes to the borrower, collateral is locked until repayment or default. The lender receives an ERC-721 loan position NFT representing their stake — transferable like any NFT.

4. Repayment

Before the maturity date, the borrower repays the principal plus the agreed interest. The collateral is released back to the borrower, and the lender receives their principal plus interest.

5. Default

If the borrower doesn't repay by the maturity date, the loan enters default status. The lender can claim the locked collateral, which by design is worth more than the outstanding loan amount.

Fees

Terminus charges a small origination fee (currently 0.25%) deducted from the principal when a loan is created. The fee is shown before you commit.

Escrow & Cancellation

Locking funds in escrow guarantees they're available when a counterparty matches. You can cancel an unmatched offer, but if you locked funds, a small cancellation fee may apply. If your escrow lock expires, you can reclaim your funds with no fee.

No Liquidations

Unlike pool-based protocols, Terminus does not perform mid-term liquidations. The collateral ratio is checked only at loan origination. Borrowers can hold their position through price volatility without fear of forced liquidation. The trade-off is that lenders accept the risk of collateral value dropping — mitigated by requiring over-collateralization.

Protocol Limits

Governance sets collateral ratio limits (min/max) and duration limits (min/max loan term). Each whitelisted token also has per-token principal amount limits (min/max). Offers must stay within all these bounds. This protects both sides from extreme or unsafe terms while keeping flexibility for typical use cases.