Cardano
Lending

Lender Liquidity Pools (FluidTokens V3)

Lender Liquidity Pools enable flexible Cardano DeFi lending, where lenders provide ADA or stablecoins to fund loans and select specific native tokens as accepted collateral. Unlike P2P loan requests, where borrowers set terms, lenders control the parameters, allowing borrowers with matching tokens to access funds instantly, initiating standard P2P loans.

Overview

Anyone with a Cardano wallet can create a liquidity pool by depositing ADA or stablecoins and selecting particular native tokens (e.g., FLDT, USDM, or SNEK) as collateral. Borrowers with those tokens can instantly borrow a portion or the entire deposit in a particular pool, following P2P lending mechanics. Secured by FluidTokens’ non-custodial Cardano smart contracts, lenders retain full control, allowing them to withdraw or adjust the available liquidity at any time.

Creating a Pool

The lender can create a liquidity pool by depositing ADA or stablecoins with custom loan parameters:

  • Liquidity Amount: How much ADA or stablecoins to offer.

  • Accepted Collateral: Specific tokens (e.g., stablecoins or other Cardano native tokens).

  • Loan Terms: Maximum loan amount, APR, and duration (days, weeks, or perpetual).

Active loans can be tracked from the DASHBOARD tab.

Note: You must hold the NFT bond representing each lender position. 

How to Lend

1. To become a lender, click on SUPPLY or CREATE LOAN. Alt text

2. You’ll see the DEPOSIT window. Alt text

3. Type in the desired amount of ADA you wish to lend. Alt text

4. Select the markets you want to lend your ADA to. Alt text

5. Click on CONTINUE when you’re ready. Alt text

6. Choose the Maturity Period of your deposit. Alt text

7. Double-check your deposit terms. Alt text

8. Click on DEPOSIT when you’re ready. Alt text

9. Click on CLOSE after you successfully sign the transaction. Alt text

10. You can navigate to your loans and deposits from the top banner. Alt text

11. Click on DASHBOARD to check your positions. Alt text

12. You can see your pools with deposited ADA under Pools. Alt text

13. You can adjust your deposit parameters via the Modify Pool feature. Alt text

14. Click on Lends to check all active loans you’ve supplied. Alt text

Tip: Your pool is listed and aggregated with others based on the type of collateral. In this regard, accepting multiple tokens as collateral will increase your chances of finding borrowers.

Borrowing

Alt text

Borrowers can instantly borrow from pools that accept matching collateral types and loan terms. Loans follow the P2P lending process: borrowers lock tokens as collateral, receive funds, and repay the loan with interest by the specified deadline.

Fixed-term Loans

Fixed-term loans enable lenders to earn a fixed-rate Annual Percentage Rate (APR) over a predefined period, such as one week, two weeks, or a custom duration, providing predictable returns on deposited ADA or stablecoins.

I = P \times r \times t, where 

  • ( I ) = interest earned 
  • ( P ) = principal
  • ( r ) = annual rate 
  • ( t ) = time 

Example:

  • ( P ) = principal (10,000 ADA)
  • ( r ) = daily interest rate (0.04 for 4% base rate in USDM)
  • ( n ) = number of days (1/12 for 1 month)

I = 10,000 \times 0.04 \times \frac{1}{12} = 33.33 USDM.

This means a 10,000 ADA deposit would earn 33.33 USDM in interest over 1 month.

Perpetual Loans

Perpetual loans unlock access to P2P loans without expiration, guaranteeing returns through compounding interest. Borrowers must pay an incremental monthly fee of 2% to keep the loan active (e.g., Month 2: 6%, Month 3: 8%, etc.). This mechanism protects lenders by accruing higher yields over time. If the incremental rate pushes the Loan-to-Value (LTV) ratio toward the liquidation threshold, borrowers can perform any of the following actions to manage their debt:

  • Repay the loan;
  • Top up collateral;
  • Refinance;
  • Recast;

The formula for compound interest is: A = P \times (1 + r)^n

Where:

  • ( A ) = final amount
  • ( P ) = principal (10,000 ADA)
  • ( r ) = daily interest rate (derived from annual rate / 365)
  • ( n ) = number of days

Interest accrued = A - P.

Example 1 (After 30 Days / 1 Month):

( P ) = principal (10,000 ADA) Base annual rate = 4% → daily rate r \approx 0.00010959 ( n ) = 30 days A = 10,000 \times (1 + 0.00010959)^{30} \approx 10,032.93 USDM Interest = 10,032.93 - 10,000 = 32.93 USDM.

Example 2 (After 90 Days / 3 Months):

Sequential compounding with incremental rates:

  • Month 1: Base 4% annual → daily r_1 \approx 0.00010959, n = 30A_1 \approx 10,032.93 USDM (interest: 32.93 USDM)
  • Month 2: 6% annual → daily r_2 \approx 0.00016438, n = 30A_2 = A_1 \times (1 + 0.00016438)^{30} \approx 10,082.52 USDM
  • Month 3: 8% annual → daily r_3 \approx 0.00021918, n = 30

A_3 = A_2 \times (1 + 0.00021918)^{30} \approx 10,149.03 USDM Total interest = 10,149.03 - 10,000 = 149.03 USDM.

Example 3 (After 180 Days / 6 Months):

Continuing sequential compounding:

  • Month 4: 10% annual → daily r_4 \approx 0.00027397, n = 30A_4 \approx 10,232.78 USDM
  • Month 5: 12% annual → daily r_5 \approx 0.00032877, n = 30A_5 \approx 10,334.19 USDM
  • Month 6: 14% annual → daily r_6 \approx 0.00038356, n = 30A_6 \approx 10,453.77 USDM

Total interest = 10,453.77 - 10,000 = 453.77 USDM.

Note: To maintain healthy LTV levels and avoid default or liquidation, borrowers should proactively monitor their positions and utilize our risk management features - Collateral Top-up, Refinance, or Recast. They allow users to reset rates, reduce principal, or realign terms with current market conditions.

Refinance

![Alt text][images/refinance1.jpeg]

Refinancing allows borrowers to replace an existing perpetual loan with a new one at a lower base rate. This is useful when market rates drop or to avoid incremental rate hikes. Lenders receive full repayment plus accrued interest upon refinance.

How to Refinance:

  1. Borrowers select an active loan from the DASHBOARD > Borrows tab.
  2. Click Refinance Loan and review current terms vs. proposed new terms (e.g., new APR, collateral requirements).

![Alt text][images/refinance2.jpeg]

  1. Connect a new liquidity pool or lender matching the new terms.
  2. Sign the transaction to close the old loan (repaying principal + interest) and open the new one.
  3. The original lender is notified and receives funds; the borrower locks new collateral if needed.

Note: Refinancing incurs all standard fees, including network fees and platform fees. 

Recast

Recasting adjusts an existing perpetual loan by adding a lump-sum payment toward the principal, effectively lowering the outstanding balance (original principal + accrued interest) for future calculations without resetting the incremental rate. Interest then accrues on the reduced balance, reducing monthly fees and slowing overall cost growth relative to the original path, while benefiting lenders through earlier partial repayment.

How to Recast:

  1. From the DASHBOARD > Borrows tab, select the loan and click Recast Loan.
  2. Enter the lump-sum amount to apply toward the principal (must be in ADA or stablecoins).
  3. Review the updated loan balance, new monthly fee, and projected incremental rate timeline.
  4. Sign the transaction to process the payment and recast.
  5. The lender receives the lump sum immediately, and the loan terms are updated on-chain.

Note: Recasting requires sufficient wallet balance and maintains the original collateral unless topped up separately. 

Refinance vs. Recast - A Side-by-Side Comparison

The table compares management options for a 10,000 ADA perpetual loan over 6 months (assuming fixed collateral value of 15,125 USDM for initial ~66% LTV; no market price changes). The following example is illustrative and is not financial advice. ![Alt text][images/re-comparison-table.png]

How to Borrow

1. Go to app.fluidtokens.com/ada/borrow. Alt text

2. Connect your wallet using the CONNECT WALLET button. Alt text

3. Click on CREATE LOAN. Alt text

4. Type in the amount you want to borrow. Alt text

5. Type in the amount you want to deposit as collateral. Alt text

6. Set the loan maturity. Alt text

7. Double-check before finalizing the transaction. Alt text

8. Click on BORROW when you’re ready. Alt text

9. Click on CLOSE after you finalize the transaction. Alt text

10. You can keep track of your loans from the Borrows tab. Alt text

11. Click LOAN ACTIONS to make payments, manage collateral, or repay your loan. Alt text Tip: You can transfer and/or sell your loan by transacting the NFT bond representing it.

Pool Management

Lenders can withdraw unused liquidity or add more at any time via the dashboard.

How to Withdraw from a Pool

1. Go to https://app.fluidtokens.com/ada/dashboard Alt text

2. Connect your wallet by clicking on CONNECT WALLET in the top right corner Alt text

3. Navigate to DASHBOARD in the top left corner Alt text

4. Click on POOL ACTIONS under the desired pool Alt text

5. Click on Withdraw and type in the amount you wish to withdraw Alt text

6. Click on WITHDRAW and sign the transaction Alt text

7. You’ve successfully withdrawn your deposit! Alt text

Important Note: You cannot withdraw liquidity that has already been borrowed. To withdraw your entire deposit, you must wait for tall borrowers to repay their loans.

How to Modify Pool Parameters

1. Go to https://app.fluidtokens.com/ada/dashboard. Alt text

2. Connect your wallet. Alt text

3. Navigate to DASHBOARD in the top left corner. Alt text

4. Click on POOL ACTIONS under the pool you want to modify. Alt text

5. Click on Modify Pool. Alt text

6. Type in the desired amount in the You lend tab. Alt text

7. Select the markets you wish to supply. Alt text

8. Click on CONTINUE when you’re ready. Alt text

9. Select the desired maturity period of your deposit. Alt text

10. Set the desired interest rate Alt text

Tip: You can choose from one of the recommended rates.

11. Click on MODIFY when you’re ready to supply. Alt text

12. Click on CLOSE and enjoy the yields from your DeFi loan! Alt text

Use Cases

  1. Stablecoin Lending: Offer liquidity for stablecoin collateral (e.g., USDM) to support low-volatility lending.

  2. Passive Income: Earn interest (APR) from borrowers while maintaining control over your funds.

  3. Ecosystem Support: Provide liquidity for Cardano native tokens, boosting projects in the community’s verified token list.

Liquidations

Loan liquidations are the primary tool for risk management on the FluidTokens V3 app. The lender can manually trigger liquidations in two cases:

  • When the Loan-to-Value (LTV) reaches 80%* or higher;
  • If the borrower defaults/doesn’t repay their loan on time;

The liquidation penalty is set at 10%. The lender receives a 5% fee from the collateral, and the platform retains the other 5%. This incentivizes active management while supporting platform sustainability.

Note: The lender must have the specified NFT bond, while the borrower must have the underlying NFT bond to claim the remainder from the liquidation. Delays in triggering liquidation may result in losses if the collateral value continues to decline.

*Check the Risk Parameters section for more information on LTVs

Risk Parameters

As with any DeFi protocol, there is a generic risk of smart contract bugs and exploits. In this regard, FluidTokens has taken all the necessary precautions by utilizing non-custodial smart contracts, audited by Vacuum Labs.

LTV and Liquidation Thresholds for High-Liquidity Assets

Initial markets focus on liquid assets with standardized LTV and liquidation thresholds. Future assets will have variable thresholds based on liquidity depth.

Asset Minimum LTV Liquidation Threshold
FLDT 66% 80%
USDM 66% 80%
USDA 66% 80%
SNEK 66% 80%
NIGHT 66% 80%
WMTx 66% 80%
DJED 66% 80%
iUSD 66% 80%
STRIKE 66% 80%
IAG 66% 80%
HOSKY 66% 80%
wBTC 66% 80%
wUSDC 66% 80%
cAP3X 66% 80%
C3 50% 66%
BBSNEK 50% 66%

Note**:** New assets added in the future will have LTV and liquidation thresholds tailored to their liquidity depth, balancing risk and opportunity.

For detailed risk information, refer to the DeFi Risks and Security section on the FluidTokens website.

Fees

FluidTokens V3 uses a simple, predictable fee model designed to keep lending accessible while sustainably rewarding long-term protocol participants.

Alt text

Fee Distribution to $FLDT Stakers
  • 50% of all fees collected across the protocol are distributed to $FLDT stakers
  • This includes:
    • Maker (loan opening) fees
    • Repayment and closing fees
    • Liquidation fees
  • Rewards are distributed monthly
Liquidation Fee Explained
  • Penalty: 10% of the total debt
  • Liquidation fee: 50% of the penalty
  • Protocol fee: 50% of the penalty
  • Effective premium for the liquidator: 5% of the borrow amount

This design balances risk management while keeping liquidation costs predictable.

Minimum Fees

Minimum fees apply to repayment, and closing actions to ensure on-chain execution remains economical across different assets.

Asset Min Fee
ADA 5
FLDT 5
NIGHT 50
SNEK 5,000
IAG 5
OADA 5
USDM 5
USDA 5
STRIKE 5
WMTX 5
iUSD 5
DJED 5
wUSDC 5
cAP3X 5
wBTC 0.0000005
HOSKY 50,000
CHARLI3 5

Note: Minimum fees apply only when min fee > interest fee.

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