0xngmi announces the launch of a new project to tackle liquidity constraints

LlamaLend pools do not include a liquidation system. Rather the pool owners can attach any liquidation system they desire. This means that if a user wants to prioritise dumping NFTs and avoiding bad debt, he can simply allow anyone to liquidate an expired loan by providing the borrowed amount. The system is extremely adaptable and can accommodate any liquidation logic that users desire. For example, holding an auction for NFTs or extending repayment plans are two examples.

Talking about the project, its GitHub page explains, "If a holder needs liquid money because a good opportunity has appeared, all they can do [now] is just sell their NFTs."

To discourage repayments, 0xngmi proposes an additional late fee that scales linearly by 100 per cent of the borrowed amount every 24 hours. In addition, the protocol will use an oracle system with a single request to determine the NFT borrow price and no further requests after that.

This will be accomplished by some server tracking the minimum floor price for a configurable time period (e.g., a week) and, when requested, signing a message with that price. The user can submit the message on-chain to borrow ETH against that price. According to 0xngmi, the move would be the most cost-effective for NFTs with low borrowing volume because they do not need to update their prices on-chain constantly.

The proposed oracle for LlamaLend is extremely cheap to run. This is due to the fact that it never needs to make a transaction. In this way, it eliminates all of the complexity of dealing with high gas prices.

The proposal by 0xngmi is expected to be extremely important for NFTs. NFTs cannot be directly replaced. So, if an NFT is liquidated, no one can retrieve the same one. Thus, for NFT loans, the additional assurances proposed by 0xngmi are critical for users. It is important to note that the protocol is primarily intended for small NFT collections.