Lending Protocol Glossary
Compressed vocabulary for reviewing wallet and indexer code. Citations: Simplicity docs, simplicity-lending.
- Borrower party
- Holds collateral asset A (e.g. LBTC). Posts an offer, may cancel before acceptance, repays principal + fee before expiry, or loses collateral on default.
<dt>Lender <span class="tag">party</span></dt>
<dd>Holds loan asset B (e.g. USDT). Accepts an offer by funding principal; receives repayment or liquidated collateral.</dd>
<dt>Collateral <span class="tag">asset</span></dt>
<dd>Asset A locked by the borrower to secure the loan. Returned on full repayment; transferred to lender on liquidation.</dd>
<dt>Principal / Loan amount <span class="tag">asset</span></dt>
<dd>Asset B the borrower receives from the lender when the offer is accepted.</dd>
<dt>Lending term <span class="tag">time</span></dt>
<dd>Deadline (block height or timestamp) by which the borrower must repay. After expiry, lender may liquidate.</dd>
<dt>Loan fee <span class="tag">fee</span></dt>
<dd>Fixed fee in asset B paid on repayment — interest for a fixed-term loan in the simplified contract.</dd>
<dt>Origination fee <span class="tag">fee</span></dt>
<dd>Fixed fee in asset A paid from borrower to lender at loan origination.</dd>
<dt>Protocol fee <span class="tag">fee</span></dt>
<dd>Share of the loan fee (reserve factor) paid to a protocol address on repayment.</dd>
<dt>Covenant <span class="tag">on-chain</span></dt>
<dd>A Simplicity smart contract attached to a UTXO. Spending requires a valid witness proving branch conditions.</dd>
<dt>Lending offer <span class="tag">covenant</span></dt>
<dd>The main protocol covenant governing pending → active → settled/liquidated transitions. Reference impl: single <code>LendingOffer</code> program with witness branches.</dd>
<dt>Pre-lock <span class="tag">covenant</span></dt>
<dd>Earlier design stage in official docs: initialization covenant detected by indexer via tx template (5+ inputs, 6+ outputs, OP_RETURN pubkey, parameter UTXOs).</dd>
<dt>Utility NFT <span class="tag">token</span></dt>
<dd>One-unit Liquid asset encoding a role (borrower, lender, protocol keeper). Glued to covenant logic; enables tracking and secondary transfer of positions.</dd>
<dt>Parameter token <span class="tag">token</span></dt>
<dd>NFT whose <em>amount field</em> bit-packs offer parameters (rate, expiry, base amounts). Docs: <code>FIRST_PARAMETERS_NFT</code>, <code>SECOND_PARAMETERS_NFT</code>.</dd>
<dt>IssuanceFactory <span class="tag">covenant</span></dt>
<dd>Per-borrower factory covenant that mints utility NFTs for new offers. Created once; <code>IssueAssets</code> path issues role tokens per offer.</dd>
<dt>Indexer <span class="tag">off-chain</span></dt>
<dd>Service scanning Liquid blocks, verifying offer txs, maintaining offer DB, exposing REST API for discovery and status updates.</dd>
<dt>CMR <span class="tag">crypto</span></dt>
<dd>Commitment Merkle root — script hash of a Simplicity program. Indexer recompiles covenant from extracted params and compares CMR to output script.</dd>