🔄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
The Lender clicks “Withdraw Early” in the OpenTrade application
The Lender inputs the amount of vault tokens corresponding to the percentage of the Loan that they’d like to terminate
The Lender approves the transaction from their whitelisted wallet.
The Borrower will receive the early withdrawal request and begin processing it
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relevant loan collateral, conversion of USD into USDC, and delivery of USDC back to the Vault at which stage it can be withdrawn by the Lender by redeeming Vault Tokens.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 Product is currently two (2) business days.
The Borrower is currently operating with a 0% liquidity buffer in USDC. In this way, they are able to maximize the yield payable to investors. This may be adjusted upwards to speed up withdrawal times for a certain % of outflows based on lender feedback and demand over the coming months.
We're currently engaging with several market makers and liquidity providers to make the early withdrawal processing period instant or near instant. Further updates will be communicated in due course.
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
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 |
The early withdrawal fee is multiplied by principal amount to be terminated early to calculate the Early Withdrawal Fee.
The amount of collateral corresponding to the principal amount to be terminated is liquidated.
The Borrower receives the net sale proceeds in USD.
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 Fee | 3. Collateral Sold | 4. Net Sale Proceeds | 5. Early Withdrawal Amount |
|---|---|---|---|
25.00 USDC | $25,000 | $25,000 | $24,975 |
The Borrower converts USD to USDC and repays the Early Withdrawal Amount in USDC.
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 Redeemed | 7b. USDC Withdrawn |
|---|---|
25,000 | 24,975 |
Last updated