Managing Positions

After a loan activates, both borrowers and lenders need to monitor and manage their positions. This guide covers ongoing position management.

For borrowers

Understanding position health

Your health score measures how safe your position is:

Health Score = (Collateral Value / Total Debt) × 100%

Health Score	Status	What to do
150%+	Safe	Position has substantial buffer
110-150%	Warning	Consider adding collateral
Below 110%	Critical	Add collateral immediately

What affects your health

Collateral price drops - If ETH drops 10%, your health score drops proportionally

Interest accrual - Debt grows over time, gradually reducing health

Collateral price rises - Good news - health improves automatically

Adding collateral

To improve health:

1. Go to your active loan

2. Click "Add collateral"

3. Enter amount

4. Confirm transaction

Top-ups are immediate. Health updates as soon as the transaction confirms.

Calculating how much to add

If you have $10,000 debt at 120% health (collateral worth $12,000) and want 150% health:

Target collateral = 150% × $10,000 = $15,000
Additional needed = $15,000 - $12,000 = $3,000

Making repayments

Partial repayment:

• Reduces your debt balance

• Improves health score

• Loan stays active

Full repayment:

• Pays principal plus all accrued interest

• Closes the loan

• Unlocks collateral for claiming

Calculating interest owed

For a $10,000 loan at 7% APR after 15 days:

Interest = $10,000 × 7% × (15/365) = $28.77
Total owed = $10,028.77

Claiming collateral

After full repayment:

1. Navigate to your repaid loan

2. Click "Claim collateral"

3. Confirm transaction

For same-chain loans, you receive collateral immediately. For cross-chain, you claim on the chain where collateral is held.

For lenders

Understanding your debt tokens

Your debt tokens track your claim:

Metric	Meaning
Token balance	Your share of this loan
Price per token	Current value (starts at 1.0)
Accrued amount	Funds available for redemption
Outstanding principal	Remaining debt owed

How token value changes

When borrower repays: Price per token increases

When position liquidates: Price updates based on liquidation proceeds

When borrower defaults: Price reflects recovered collateral value

Redemption

To convert debt tokens to underlying assets:

1. Go to your debt position

2. Click "Redeem"

3. Enter tokens to burn

4. Receive proportional share of accrued funds

Redemption = Tokens × Price Per Token

If price is 1.07 and you redeem 5,000 tokens, you receive 5,350 USDC.

When to redeem

After full repayment: Redeem all tokens for full return

Partial redemption: Take some profits, keep some exposure

If health looks bad: Redeem before potential liquidation losses

Managing multiple loans

If your intent matched multiple borrowers:

• You hold separate debt tokens for each

• Each has independent health and terms

• Track and redeem each separately

• One loan's outcome does not affect others

Transferring debt tokens

Debt tokens are standard ERC-20s:

• Use normal wallet transfer functions

• Recipient becomes new claimant

• You lose all redemption rights after transfer

Loan outcomes

Successful repayment

1. Borrower pays principal + interest

2. Funds flow to debt contract

3. Lender redeems tokens for full return

4. Borrower claims collateral

Both parties receive their expected outcome.

Liquidation

1. Collateral value drops below threshold

2. Liquidator seizes and sells collateral

3. Debt is repaid minus liquidation bonus

4. Lender may receive less than full return

5. Borrower loses liquidated collateral

Partial liquidation is possible - only enough collateral is sold to restore health.

Default

1. Loan expires without repayment

2. All collateral is seized

3. Collateral is sold

4. Proceeds go to lender (via debt contract)

5. Lender may receive more or less than owed

Default forfeiture is permanent. Borrower cannot pay late.

Monitoring tools

Dashboard metrics

The frontend shows:

• All active positions

• Health scores and risk levels

• Time until expiration

• Accrued interest / repayments

• Liquidation thresholds

Alerts

Set up notifications for:

• Health entering warning zone

• Approaching expiration

• Repayments received

• Liquidation events

Best practices

For borrowers

• Check health at least daily during volatile markets

• Keep top-up collateral ready in your wallet

• Set calendar reminders for expiration

• Repay early if you have the funds

• Maintain at least 130% health buffer

For lenders

• Diversify across multiple loans

• Only accept collateral you understand

• Monitor borrower health regularly

• Consider partial redemption for liquidity

• Be prepared for liquidation scenarios