Key Features

Oracle-Immune Term Windows

The defining feature of Stormbit: LTV is checked only at origination, never during the term.

How It Works

1. LTV is validated when the loan is allocated

2. Once allocated, collateral value is not monitored

3. Borrower has pre-priced access to funds until maturity

4. At maturity: repay in full, or collateral goes to auction

Why This Matters

ETH drops 30% in 24 hours? Flash crash? Market manipulation? Traditional protocols liquidate you immediately. Stormbit protects you until maturity — no impact during the term.

Economic Structure

This term certainty is priced into the loan upfront. Lenders absorb volatility risk during the fixed window, so:

• Borrowers pay a premium (base rate + volatility component)

• Premium compensates lenders for tail risk exposure

• Higher LTV or longer duration increases premium cost

• Loan durations are capped based on collateral volatility (7-90 days typically)

---

Rates Locked at Origination

Every loan has predetermined:

• Interest rate — Known at origination, never changes

• Duration — Specific maturity date

• Total cost — Principal + interest calculated upfront

Benefits

For Borrowers:

• Budget with certainty

• No surprise rate spikes

• Plan strategies with known costs

For Lenders:

• Volatility-compensated returns

• Clear risk horizon

• No utilization curve games

Example

Loan Parameters:
- Principal: 50,000 USDC
- Duration: 30 days
- APR: 12%

Cost Calculation:
- Interest = 50,000 × 12% × (30/365) = 493 USDC
- Total repayment: 50,493 USDC
- Known from day one

---

Risk-Premia Pricing Model

Unlike protocols with utilization-based rates, Stormbit prices each loan against the Underwriting Surface.

The Underwriting Surface

Every loan's premium is a function of three risk dimensions:

Risk Premium = f(LTV, Duration, Implied Volatility)

• LTV (Loan-to-Value): Lower collateral buffer = higher premium

• Duration: Longer exposure window = higher premium

• Implied Volatility: Market volatility from derivatives = higher premium

Premium Structure

Borrowers pay an all-in rate that includes:

$$r_{total} = r_{base} + r_{vol}$$

Variable	Description
rbase	Base interest rate (time value of capital)
rvol	Volatility premium (tail risk compensation)

The volatility premium is what lenders earn for absorbing price risk. This is the value that leaks to MEV bots on liquidation-based protocols.

Conceptual Example

ETH Collateral Loan:
- LTV: 80% → Moderate buffer
- Duration: 30 days → Medium exposure window
- Market IV: 60% annualized → Moderate volatility

Premium Breakdown:
- Base interest: ~5% APR (time value)
- Volatility premium: ~8% APR (tail risk compensation)
- Total: ~13% APR

Same loan with 90% LTV or 90-day duration would have higher volatility premium.

Higher risk dimensions = higher premium. Priced continuously from market data.

---

Modular Hook System

Hooks inject custom logic at key lifecycle events without modifying core protocol.

Available Hook Points

Term Lifecycle:

• beforeTermInitialize / afterTermInitialize

• beforeTermModifyPosition / afterTermModifyPosition

• beforeTermSettle / afterTermSettle

Loan Lifecycle:

• beforeAllocate / afterAllocate

• beforeRepay / afterRepay

Built-in Hooks

Hook	Purpose
P2P Hook	Only term owner can allocate (manual approval)
AaveV3 Hook	Deposit idle funds to Aave for additional yield
Timelock Hook	Add delays for large allocations

Custom Hook Examples

• KYC Gate: Require identity verification before lending

• Governance Hook: DAO approval for large loans

• Oracle Hook: Custom price feeds for exotic collateral

• Referral Hook: Track and reward referrals

---

Pluggable Module System

Modules handle collateral validation and management:

ERC20LTV Module

Standard over-collateralized lending:

• Validates LTV at allocation

• Holds collateral during loan

• Releases on repayment

• Transfers to liquidator on default

ERC721 Module

NFT-backed P2P lending:

• Locks NFT as collateral

• No automated pricing (lender evaluates)

• Returns NFT on repayment

• Transfers to auction buyer on default

Attestation Module

Identity/credential-gated lending:

• zkTLS attestations (zkPass, Primus, Reclaim)

• Schema-based verification

• Usage limits per borrower

• Privacy-preserving proofs

---

Dutch Auction Liquidation

When loans default, collateral is sold via Dutch auction.

For the full liquidation flow and mechanism, see Dutch Auction Liquidation.

Timeline

Time	Auction Price
Maturity	100% of debt
+1 day	~93% of debt
+3.5 days	~75% of debt
+7 days	50% of debt

Benefits

• No sudden cascades — Predictable auction timeline

• Fair price discovery — Market determines clearing price

• Liquidator competition — Better outcomes for lenders

• Borrower incentive — Repay before auction for better outcome

---

Fee Structure

Transparent fee distribution on every loan:

Fee Breakdown

Fee Type	Amount	Recipient
Protocol Fee	8% of interest	Treasury
Lender Fee	1% of interest	Term owner
Net to Lender	91% of interest	Depositors

Example

Loan repays 500 USDC interest:
- Protocol fee: 500 × 8% = 40 USDC
- Lender fee: 500 × 1% = 5 USDC
- To depositors: 500 - 45 = 455 USDC

No Hidden Fees

• No origination fees

• No early repayment penalties

• No withdrawal fees

• All fees visible in transaction