Motivation:

As Pine Protocol continues to expand and more users participate in borrowing and lending activities, it is essential to ensure the protocol is designed around long-term sustainability.

One approach to ensure this is to implement a liquidation fee that encourages responsible borrowing and lending behavior. Currently, Pine Protocol does not charge a liquidation fee, and this proposal seeks to introduce a fee of 5% of the borrowed amount, payable by the lender at the time of liquidating an expired loan.

Specifications:

The proposal is to enable a liquidation fee of either 5% of the borrowed amount in MATIC or ETH, OR 3000 PINE flat rate, to be charged by Pine Protocol as a protocol fee whenever a lender wishes to liquidate an expired loan. The fee will be payable by the lender at the time of liquidation and will not be deducted from the liquidation amount. The lender will not be required to pay anything other than the 5% liquidation fee or a flat rate depending on the choice of the lender, and network transaction fees. . The liquidation process will be initiated by the lender, and Pine Protocol’s smart contracts will execute the liquidation. The lender will be required to pay the 5% fee.

There continues to be no liquidation threshold, and the fee will only apply whenever a lender chooses to liquidate an expired loan.

To ensure transparency and fairness, borrowers and lenders will be able to monitor their loan status and liquidation fees in real-time. Borrowers will receive alerts if their loan is approaching expiration, and lenders will be able to track their liquidation fee obligations and defaulted amounts.

Conclusion:

Introducing a liquidation fee on Pine Protocol will incentivize responsible borrowing and lending behavior, contributing to the security and stability of the platform. This fee will enable Pine Protocol to continue expanding its user base while ensuring that the platform remains secure and reliable. By implementing this fee, Pine Protocol can maintain its commitment to transparency and fairness, while encouraging users to participate in borrowing and lending activities.