No Liquidations
In agreement-based lending, the absence of liquidations means loans aren't forcibly closed when collateral value fluctuates.
There are two types of lending :
Algorithmic lending : Protocols like Aave, Compound, and Morpho operate with automated liquidation mechanisms built into their design. These protocols continuously monitor collateral values and automatically trigger liquidations when predetermined thresholds are reached.
Agreement-based lending : Protocols such as Rain.Fi, Teller, and Stormbit function through fixed terms and duration conditions. In this model, lenders can only claim collateral after the loan period ends. These protocols are price-agnostic, operating independently of real-time price fluctuations.
Stormbit's vision enables the use of any Real-World Asset (RWA) as collateral, including illiquid assets. This necessitates an agreement-based lending approach because:
Illiquid RWAs cannot be priced continuously
Case-by-case evaluation replaces algorithmic pricing
Composable, modular lending agreements accommodate unique asset characteristics.
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