No mystery.
Just the mechanics.

One deposit. Two destinations.

Deposit the project’s configured PONS token. First, 8% goes into a shared burn queue. The remaining 92% is locked as collateral. You do not send extra fee tokens.

Your loan is 40% of that remaining collateral’s validated ETH value, subject to available lending cash and the contract’s readiness checks. There is no interest or repayment deadline. Network gas is separate and paid by the person submitting the transaction.

In the app, “Approve & borrow” requests two wallet confirmations: permission for the deposit, then the loan itself. The quote uses a 1% minimum-output tolerance and a five-minute transaction deadline. This deadline protects the quote; it is not a repayment deadline.

Project fees can reduce your debt.

Actual newly recognised project receipts, after upstream PONS deductions, are split 50% for lending, 20% for borrower benefits and 30% for development. Repayments, existing Treasury cash and previously allocated fees do not create fresh credit budgets.

The 20% benefit portion creates a matching debt-credit budget. Credits reduce eligible active loans in proportion to their outstanding debt, after previous credits and repayments. They apply when fees are recognised, not on a weekly or hourly timetable. Integer rounding is handled by the contract’s exact-sum accounting.

Credits cannot exceed remaining debt. Unallocated excess is tracked separately and is not repeatedly redistributed. Final credits are irreversible, even if the owner later withdraws benefit ETH.

When does a loan qualify?

The current handover records the approved collection-time fallback. Already-escrowed fees are processed before a new loan changes debt weights. However, fees still waiting in an upstream PONS hook may have been earned before the loan opened and only arrive later. This limitation is documented; the system does not claim to prove earning-time attribution.

A partial repayment immediately lowers the loan’s share of future allocations. Closed or debt-free positions receive no new credits. Upstream fees that have not arrived are not final credits and cannot reopen a closed loan. Future credits are not guaranteed.

Repay at your pace. Reclaim your collateral.

Use your position ID to read your effective debt and collateral. Repay part or all of your debt in ETH. Partial repayments do not release collateral or change the recorded liquidation price.

Once repayments, final credits, or both bring debt to zero, the borrower can withdraw the remaining collateral in a separate transaction. The original 8% deposit fee is not returned. Repayment and debt-free withdrawal do not need a valid oracle price; a failed fee claim is handled on a best-effort basis for these exits.

The supplied contract also permits withdrawal with a remaining balance of at most 0.000001 ETH. That remainder is written off as a Treasury loss, not a debt credit or repayment. These small-balance positions cannot be liquidated; the app reads the withdrawal limit from the configured contract.

Which price matters?

The configured oracle supplies separate borrowing and liquidation readings. Lending requires the correct graduated PONS market and a valid price; no unverified website quote is used as a fallback. The supplied adapters have distinct trust assumptions, history and freshness checks that still require launch review.

Price averaging or reporting delays detection of a crash. Manual response and transaction inclusion add further delay. “Immediately callable” describes eligibility after a valid reading, not a promise of instant execution. Invalid or stale oracle prices block price-based liquidations, but do not prevent repayment or debt-free recovery.

One queue. Bounded burn batches.

The queue combines the upfront token fees and seized collateral. Once it reaches 0.1% of the current total supply, rounded up to a token base unit, borrowing and liquidation each attempt at most one batch.

Only queued tokens can be burned; live collateral cannot. Excess remains for a later batch. A failed burn preserves the queue and allows the main borrow or liquidation operation to complete. Sending tokens to a dead address is not treated as an equivalent supply-reducing burn.