User Story · The Borrower

Bob never talks to a lender.

He holds 10,000 TOKEN at $1.00 and doesn't want to sell. Here is his whole loan, number by number — what he can borrow, the two prices that govern his life, how the loan pays itself, and the three ways it ends.

The setup

The ladder is the term sheet

what he has10,000 TOKEN, trading at $1.00. Beneath the price sits the book — say a lender standing at 90¢ with committed USDC.

his coverageHis tokens are worth, to this book, exactly what the standing bids commit to pay: 10,000 × $0.90 = $9,000 of funded exit. Not the market price, not an oracle's opinion — the promises under his feet.

his loanOrigination opens at about half of coverage: Bob escrows the 10,000 TOKEN and borrows $4,500 for a 30-day term, paying a volatility-and-duration-priced entry fee (~2%) upfront. Nothing was negotiated; nobody approved him. The ladder is the term sheet.

Borrowing power isn't what your collateral is "worth" — it's what the capital beneath it has committed to pay. Deeper book, bigger loan. Same tokens over a 50¢ book would borrow half as much.

The two numbers

When, and at what price — separated

Everywhere else, "liquidation price" is one dreadful number. Here it's two — and they behave completely differently:

	The trigger (when)	The fill (at what price)
the number	~$0.63 — where debt ÷ (tokens × price) crosses the band: $4,500 ÷ (0.72 × 10,000)	$0.90 — the lender's pre-committed tick
who sets it	Bob's own debt — arithmetic, no oracle	the lender, months in advance
how it moves	falls as skims and tranches melt his debt — the loan runs away from its own trigger	doesn't. The print can panic to $0.60; his tranche still fills at 90¢
on Aave	both numbers are the same cliff, and the fill is whatever liquidity exists at the worst moment

Guardrail worth noticing: if Bob borrowed his full $9,000 coverage, his trigger would sit at $1.25 — above the market, instantly in default. That's exactly why origination LTV opens well below coverage: the gap between the two numbers is his room to breathe.

The loan pays itself

Rallies are his repayments

the skimTOKEN rallies to $1.15. A keeper skims a slice of the realized gain from his escrow — say $2,000 — split by the utilization curve: most melts his debt, the lender share pays the buckets funding him, ~1% bounties the keeper. Nobody asked Bob for a payment.

the ratchetDebt $4,500 → $2,900 means his trigger falls from $0.63 to $0.40. Every rally the loan survives makes it harder to kill. Hold long enough through enough upside and the debt melts to zero — the self-repaying loan.

the honest costIn sideways chop he pays skims and premiums in both directions — that's the product's real price: you pay for volatility instead of funding. The entry fee and the curve were priced for exactly this.

When it goes wrong

Trimmed, not wiped

the bandPrice falls through $0.63. No cliff: a tranche fires — ~15% of his escrow converts into the standing bids at their quoted 90¢, knocking his debt down, which immediately lowers his next trigger. He's de-risked, not destroyed.

the pending windowIf the drop was a wick, the tranche doesn't finalize — it sits pending; recovery inside the window restores him for a fee. A manipulated print can't take his position; only a move the market sustains can.

the floor of painWorst case — price keeps falling, tranches keep settling at pre-quoted ticks until the debt is extinguished. Bob loses at most his equity, at prices that were published before the crash existed. "My stop filled 40 points lower" cannot happen here.

The clock & the bill

Three exits, one invoice

repayAnytime: settle the (melted) debt, escrow releases. No prepayment penalty, no accrual games.

rollAt term: pay a fresh entry fee to whoever funds the next term. Rolls clear through the book — if nobody will fund the position at its current size, it rolls smaller or settles. Credit nobody will fund isn't extendable, and that's a feature.

settleWalk away: escrow converts at the ticks, debt dies, remainder returns. Non-punitive by design — expiry is a scheduled event, not a punishment.

Bob pays	Bob gets
~2% entry fee (the option premium)	leverage without selling — and without a single margin call from his wallet
lender share of skims (utilization-priced)	debt that melts on rallies
3% premium on any tranche + restore fees on wicks	fills at prices known before the news existed
roll fee per term	losses capped at his equity — never more

Watch these exact numbers move: the Market story runs Bob's whole loan live — skims, the whale crash, the tranche, the close — with every dollar narrated.