Taking out a Loan

Taking out a loan is the main call to action for a new user in the borrow flow of the Concrete product UI.

How is a loan taken through Concrete?

When a user chooses Concrete to take out a loan on a third party lending platform, they are delegating the ownership of the loan to Concrete Protocol.

This is necessary to guarantee a seamless and secure UX and to leverage the advantages of borrowing through Concrete, such as monitoring the loan's health, as mentioned in the previous Borrow section.

In a nutshell, Concrete Protocol performs a brokerage function by creating a borrowing position, on the chosen lending platform on behalf of the user, in order to actively manage and monitor this position.

The creation of a loan in Concrete requires interactions between different components of the system such as the frontend, offchain backend services, concrete smart contracts and lender smart contracts.

The smart contracts system is at the core of the borrow flow handling the funds and ownership of the position in a transparent and veritable manner by issuing a loan token (ERC-721) to the borrower's wallet, containing the loan information (such as lender, collateral supplied and borrowed amounts, asset types, loan holder) and relies on the backend to monitor loan's health and interact with the frontend.

Learn more about the functional interactions for taking out a loan in the Functional Overview section.

Specific technical information and mechanisms that are involved in this process, at a backend and smart contract level, can be found in the corresponding Product Architecure sections.

Unprotected and Protected Loans

Due to the nature of the value proposition of the Concrete product and the underlying design choices for the smart contract system, all loans are created as Unprotected Loans and can become Protected Loans when a user chooses to buy a protection plan for that loan.