III. Lending Process (Collateral Lifecycle)

1. Stake → Borrow

• Users stake ARK to borrow corresponding assets

• No market valuation or external Oracle required

2. Repayment → Unlock

• Pay off principal and interest to retrieve all ARK

• System applies payments to accumulated interest first, then to principal

3. Renewal Mechanism

• Users can renew their loans up to 3 times within the term

• Each extension period (e.g., 180 days) increases the interest rate by 0.5%

4. Liquidation Mechanism

• Liquidation triggers when collateral value falls below:

Total debt × Liquidation ratio (default is 110%)

→ This initiates the auction phase

Liquidations may offer discounted bidding (e.g., 8% discount)

If auction fails → ARK assets are recovered into the treasury