Revenue-Based Lending Operations
In addition to the core lending operations, a Revenue-Based line of credit has some extra features.
A Spigot is automatically deployed with a Line of Credit according to terms agreed.
Revenue Tokens earned by Revenue Contracts acting as security for the Line of Credit are escrowed by the Spigot for Lenders according to the split that's agreed up front.
Revenue Tokens are claimed from the Revenue Contract and made available in the Spigot.
The Revenue tokens can then be later withdrawn and used to repay a Lender whose credit line is next in the repayment queue. To facilitate this, it's possible to see the amount of Revenue Tokens in escrow ready to be withdrawn.
Revenue tokens can also be traded for Credit tokens (see next section)
Revenue Tokens can be claimed from the Spigot and traded for Credit Tokens in two ways.
Firstly, Revenue Tokens can be claimed, converted straightaway to Credit Tokens and used to repay debt.
A Borrower may want to take advantage of an increase in the relative value of a Revenue Token compared to a Credit Token and to therefore use less Revenue Tokens to repay the same amount of debt.
In the second case, Credit Tokens are held in escrow by the Spigot ready for a Lender to withdraw at any time without needing to firstly claim Revenue Tokens and then trade them for Credit Tokens. To facilitate this, it's possible to see the amount of 'unused' Credit Tokens available in the Spigot for Lenders.
It's possible to updates the whitelisted functions that a Borrower is allowed to perform on a Revenue Contract. As a reminder, these are the functions that the Borrower can still call those contracts for business as usual whilst they are providing Revenue Tokens to repay debt. The Arbiter is required to authorize this.
Control of an entire Spigot is automatically released back to the Borrower (if all debt has been been fully repaid). This enables a Borrower to easily reuse a Spigot and it's attached revenue contracts as security for a new Line. If however the Line status becomes liquidatable, control of the Spigot can pass automatically to the Arbiter. See Loan Impairment and Recourse for what happens next.
When a Line has been repaid and a Spigot released back to a Borrower, the Borrower can rollover the already configured Spigot and use it as security for a new Line.
Continuity is an important feature for future products we will build on top of Spigot. This makes it easier to continue reusing the same Spigot and make setting up new lines easier and cheaper (less gas costs) and less likely for human error.
If a Borrower doesn't pay back all debt and close all positions by the end of the term (expiry date), the Borrower has defaulted and the status of the Line will be changed to liquidatable.
The Arbiter will proceed to liquidate whatever collateral/security is available by sweeping the Spigot which henceforth receives 100% of Revenue Tokens due to the impaired status of the facility.