Two sides of one book

Lending on Kaleido is peer to peer. There is no utilisation curve and no pooled rate: someone posts an amount, a rate and a term, and someone else takes it. Both sides of the book are visible, and which side you are on depends only on which row you act on.

Requests and listings#

A borrow request says "I want 5,000 USDC for 30 days and I will pay 7.5%". Fill it and you are the lender: your capital goes out, and the borrower's collateral is already locked behind it.

A lend listing says "I will lend 10,000 USDC for 60 days at 6%". Take part or all of it and you are the borrower, on the terms as posted.

Either way the rate and the term are what the two of you agreed. Nothing re-prices them afterwards.

The rate is an APR, and the interest is fixed at origination#

The rate you see is an annual percentage rate, charged pro rata for the term:

interest = amount × rateBps × seconds / (10000 × 365 days)

So 5,000 USDC for 30 days at 7.5% is about 30.82 USDC of interest, and that figure is computed once, when the loan opens, and stored. It does not compound, it does not drift with utilisation, and it does not change if you repay late or early — a term loan behaves like a term loan.

One consequence is worth stating: a rate and a term small enough that the interest rounds to zero is refused rather than accepted as a free loan.

Collateral, and the health factor#

Collateral is deposited before you borrow and is tracked as a balance you own inside the contract, not as a per-loan escrow. You can add to it or withdraw from it at any time, subject to one rule.

That rule is the health factor:

health factor = collateral value × 80% ÷ debt value

Below 1.0 the position can be liquidated. Above it, nothing happens. The 80% is the liquidation threshold and it is a constant, not a per-asset parameter — see constant.sol.

Borrowing has a separate, tighter limit: you may draw up to 75% of your collateral's value. Those two numbers together are the headroom you open with. Borrow the maximum and your health factor starts at about 1.07 — roughly 6% of adverse price movement before you are liquidatable. That is thin on purpose: the protocol lets you take it, and does not pretend it is comfortable.

The check is not advisory and it is not in the interface. Every action that could move the health factor — borrowing, withdrawing collateral, filling, taking — is checked by the contract, so a client that forgets to check cannot produce an unhealthy position.

Floors#

Repaying#

Repayment can be partial. Each payment is split between principal and interest in the proportion the loan was originated at, so paying half the total pays half the principal and half the interest rather than being applied to one first.

The protocol's fee is taken from the interest portion of each payment and never from principal — 10% of the interest, which on the 30-day example above is about 3.08 USDC against 27.74 USDC to the lender. Every division floors, so the fee can only ever round down and the lender's share can only ever round up.

You can read the exact split before you send it: getRepaymentFee returns the fee and the amount that will reach the lender for any payment size, and getQuote returns the total repayment for a proposed amount, rate and return date.

Liquidation#

If the health factor drops below 1.0, anyone can clear the debt and take collateral for it. The penalty is 6.4% of the debt cleared, split three parts to one: 4.8% to whoever performed the liquidation, 1.6% to the protocol.

It is a waterfall rather than a flat rate, and the ordering is the important part. The lender's claim on what was seized is settled first; the penalty is only whatever was seized above that claim, capped at 6.4% of it. A position that still holds enough collateral therefore yields the full penalty, and an underwater one yields less or nothing — the shortfall lands on the penalty, never on the lender.

The split is deliberately uneven. The liquidator is not paid in the loan currency they can bank immediately; they are paid a share of the borrower's collateral as an internal position, which they then have to withdraw and sell, wearing gas on both legs and whatever the price does in between. An even split would leave 3.2% to cover all of that, which is thin enough that anything but the most liquid collateral would sit unclosed.

Seized collateral is credited to the liquidator's balance inside the contract rather than transferred out, so a liquidator finishes with a collateral balance and withdraws it as a second step. That is the same balance any depositor has, which is why there is one withdrawal path rather than a special one.

Doing it by asking#

The agent covers this whole surface — borrowing, lending, taking a listing, filling a request, repaying, cancelling, and moving collateral either way. It is also the part of the protocol delegation is designed around, because the on-chain mandate's action flags are exactly these actions: see letting it act without you.

The contract is ProtocolFacet.sol, and the pages are at /borrow.