TL, DR
•papr provides $papr token for WL's NFT Lending demand
•The papr adjusts the Target of $papr to control $papr's supply and demand, thereby affecting the mark price of $papr
•The providers of Lending Liquidity are $papr's Traders.
•The instability of $papr's Mark Price brings the instability of debt
• The essence of the papr protocol is a generalized NFT debt issuance model, $papr is a general debt token, with two prices of Target and Mark
papr is an NFT lending protocol, borrowers get the air token $papr which is minted by protocol (not USDC/ETH)
Actually, papr provides an NFT debt issuance model, $papr is the debt token. The liquidity and mark price of $papr is supported by $papr's Traders in Uniswap.
$papr has two prices, Target and Mark Price.
Mark Price is determined by market supply and demand, which is the real-time price on Uniswap.
Target Price is the price controlled by the protocol, and papr controls Target to adjust the borrower's debt and interest.
Maximum Borrow Amount= Collateral*maxLTV/Target
Debt = borrowed $papr
Interest=price of $papr upon return/price of $papr upon lending-1
papr will control debt and interest by changing Target, and then control the supply and demand of $papr, affect the Mark price of $papr, and try to maintain Mark=Targe.
If Mark<Target, means that the market demand for $papr is small, and borrowers are motivated to buy $papr to repay debt, demand for $papr increases. Meanwhile, papr will increase Target, and $papr max borrow amount will decrease, supply of $papr decreases. $papr Mark price increases.
If Mark>Target, means that the market demand for $papr is greater, papr will reduce the Target, borrowers could get more $papr, the market will circulate more $papr, the supply of $papr will increase, and the Mark price of $papr will fall.
• This mechanism is innovative. It is essentially a general debt issuance model. $papr is a general debt token. It is $papr’s Traders that provide liquidity and funds for Lending
• Not P2P, nor P2Pool, but P2 $papr Traders
papr improves the capital efficiency of NFT lending, but it also brings some problems
• Although papr can affect Mark Price through Target, Mark Price is a real-time transaction price, and its fluctuations bring about debt instability and risks for liquidity providers
• Not isolate the risk of different Collections
• Heavy reliance on $papr's Traders to provide liquidity
• It is difficult to maintain the Mark price of $papr
• No stable expectation. It’s not clear who gets the interest profit and who loses
• Debt Changes Risk
• Oracle Risk
• Liquidation Risk
• Collateral Risk
• Bad Debt Risk
I like this idea, it's creative. It's too early, let's stay tuned.
Just my own opinion, current info is little.
https://backed.mirror.xyz/8SslPvU8of0h-fxoo6AybCpm51f30nd0qxPST8ep08c
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