Proton Loan is a non-custodial decentralized lending protocol consisting of two parties:

Depositors who lend tokens to a market
Borrowers who borrow the lent tokens from a market and pay interest to the depositors in return

As one does not know the parties who engage as borrowers, it is impossible to accurately assess a borrower's default risk. This risk is accounted for by requiring all loans to be over-collateralized.

Each borrowing market has a Collateral Factor, a percentage value determining the max a user can borrow versus their deposited value (common values are ~70%). Thus, to borrow $B, a borrower has to put up $C as collateral where the following holds:

$B <= $C x Collateral Factor

Generally, the collateral factor is lower for volatile markets and higher for more stable markets.

Why Proton Loan?

Proton Loan opens up a new possibility for borrowing and lending against multiple blockchains that were not previously accessible on Ethereum or other blockchain protocols. By using a system of smart contracts powered by the Proton blockchain, users can request and fulfill loans using cryptocurrency without the need for a central mediator and without regard for the parent blockchain protocol of the requested asset.

No transaction fees on Proton Loan

The Proton blockchain charges no gas or mining fees to end-users – transactions on Proton are free. Validators get rewarded in XPR for validating transactions.