How many different actors are interacting with a Spot pool?

  1. Pool creator sets the configurations (NFTs in the pool, tranche size, collateral slots,

epoch length, interest rate, and risk parameters); doesn't need to own the NFTs he

creates the pool(s) for.

  1. Appraiser = the one who puts ETH into the pool to price the NFT. Appraisers are the Lenders. The ETH that gets put into the pool is also lent out.

  2. Owner = the one who has an NFT in a pool filled with ETH

  3. Lending Module = here Abacus, takes custody of the NFT, and gives out the loan.

1. Pool creation

The pool creator creates a pool. It contains 4 Hoodie Cryptopunks.

Sets collateral slots at 2: This means that 2 Hoodie owners can claim the liquidity at the same time.

Sets tranche size at 1: This means that every tranche can hold 1 ETH.

Sets interest rate at 10%: This means that 10% interest rate is paid out to appraisers. (Protocol takes 5% of that 10%. If interest is 1ETH, the protocol gets 0.05 ETH)

2. Appraisers

Appraisers see the newly created pool. It’s still empty. They check the current Hoodie Punk floor. It’s at 150 ETH currently.

Appraiser 1: Fills tranche 0-50 ETH for a month lock-up. Appraiser 1 is quite certain that the hoodie floor won’t drop below his tranche fills.

Appraiser 2: Fills tranche 50-150 (puts 100ETH into the spot pool) for a month. He is quite certain as well that his appraisal is correct.

Current ETH in spot pool = 150 ETH. As there are 2 collateral slots, every punk hoodie is now priced at 150 / 2 = 75 ETH.

Appraisers 3,4,5,6 & 7: Fill the Hoodie Spot pool up to 290 ETH for 1 month, which is slightly below the current floor price (each hoodie punk is now priced at 290 / 2 = 145 ETH).

3. Owners