πŸ”„Early Withdrawal Requests

Learn more about Early Withdrawal Requests in Fixed Term Vaults and how to make one.

Summary

Lenders are permitted to request early termination of their loan(s) at anytime via an Early Withdrawal Request made through the Platform. Loans can be terminated early in part or in whole.

Upon receipt of a valid Early Withdrawal Request, the Borrower will liquidate the loan collateral proportionate to the amount of the loan to be terminated and deliver back to the Lender USDC equal to the net sale proceeds of the underlying collateral less an Early Withdrawal Request Fee, including principal and interest accrued to date.

Early Withdrawal Request

An Early Withdrawal Request is a request from the Lender to the Borrower to terminate all or part of a Loan prior to the applicable Loan Maturity Date. They can be made by Lenders at anytime, in part or in whole, and will be processed on business days during banking hours.

The minimum amount for an early withdrawal request is 100,000 USDC.

Making an Early Withdrawal Request

An Early Withdrawal Request can be made by

  1. The Lender clicks β€œWithdraw Early” in the OpenTrade application

  2. The Lender inputs the amount of vault tokens corresponding to the percentage of the Loan that they’d like to terminate

  3. The Lender approves the transaction from their whitelisted wallet.

  4. The Borrower will receive the early withdrawal request and begin processing it

  5. Once processed, the Early Withdrawal Amount will be automatically sent directly back to your white-listed wallet.

Partial termination of a Loan via Early Withdrawal Request can be exercised on more than one occasion for the same loan. Different Early Withdrawal Processing Periods will run sequentially and not simultaneously.

Video Demonstration - Making an Early Withdrawal Request

Early Withdrawal Processing Period

Receipt of a valid Early Withdrawal Request from a Lender will result in the sale of relevant loan collateral and the Lender(s) will can withdraw USDC equal to Early Withdrawal Amount on or before Close of Business on the Business Day after the completion of the Early Withdrawal Processing Period.

The Early Withdrawal Processing Period is the number of business days required to process an early withdrawal request, including the liquidation of the relevant loan collateral, conversion of USD into USDC, and delivery of USDC back to the Vault at which stage it can be withdrawn by the Lender by redeeming Vault Tokens.

The Early Withdrawal Processing Period for the Treasury Management & Yield Product is currently up two (2) business days but most are repaid much sooner.

Following the Early Withdrawal Processing Period, the Borrower will repay the loan by transferring the Early Withdrawal Amount less the Early Withdrawal Request Fee in USDC into the vault, which can then be withdrawn by the Lender.

Early Withdrawal Amount

The Early Withdrawal Amount is the amount of USDC equal in value to the Net Sale Proceeds of the amount of Collateral corresponding to the proportion of the Loan which the Lender has requested to terminate early via an Early Withdrawal Request.

The Loan Amount will be adjusted to reflect the Net Sale Proceeds, which means the actual sale proceeds of the Collateral which is disposed of in order to transfer an Early Withdrawal Repayment Amount to the Lender

Early Withdrawal Request Fee

Early Withdrawals are subject to an Early Withdrawal Request Fee, a fee equal to the amount of the Loan to be terminated multiplied by the Early Withdrawal Request Fee Percentage set out in the Loan Confirmation. This fee will be deducted from the amount of the Loan to be terminated and paid to the Platform Provider.

The Early Withdrawal Request Fee covers the costs of liquidating the collateral, including brokerage and fiat conversion fees.

Example of an Early Withdrawal

Loan Parameters:

  • Principal Amount: 25,000 USDC

  • Tenor: 28 Days

  • Confirmed Loan Fee Rate: 12.00% APR

  • Early Withdrawal Fee: 0.10%

  • Exchange Rate at Start: 1.00000 USDC / Vault Token

  • Exchange Rate at Maturity: 1.00933 USDC / Vault Token

  1. The lender makes an early withdrawal request for 25,000 vault tokens, which is equal to 25,000 USDC in loan principal. This is calculated by multiplying the Early Withdrawal Request Amount by the Exchange Rate at Start.

Early Withdrawal Request Amount Principal Amount Value if Held to Maturity

25,000 Vault Tokens

25,000 USDC

25233.33333

  1. The early withdrawal fee is multiplied by principal amount to be terminated early to calculate the Early Withdrawal Fee.

  2. The amount of collateral corresponding to the principal amount to be terminated is liquidated.

  3. The Borrower receives the net sale proceeds in USD.

  4. The early withdrawal fee is deducted from the net sale proceeds of the collateral to arrive at the Early Withdrawal Request Amount by the Exchange Rate at the start of the loan.

2. Early Withdrawal Request Fee3. Collateral Sold4. Net Sale Proceeds5. Early Withdrawal Amount

25.00 USDC

$25,000

$25,000

$24,975

  1. The Borrower converts USD to USDC and repays the Early Withdrawal Amount in USDC.

  2. On or before the Close of Business on the Business Day after the completion of the Early Withdrawal Processing Period, the Early Withdrawal Amount can be withdrawn by redeeming the corresponding amount of vault tokens.

7a. Vault Tokens Redeemed7b. USDC Withdrawn

25,000

24,975

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