Contract Management
Managing your contract portfolio performance
Last updated
Managing your contract portfolio performance
Last updated
As a new ARC account, you will only see the ability to create a new contract as a borrower or lender. You can click on the button to either borrow money or lend money.
All ARC accounts can create contracts as either a borrower or lender. Simply click on the button to Lend Money or Borrow Money. You will then be presented with a Create Contract form. In order to create the contract, you will need to know the email address associated with the account of the counterparty you wish to create the contract with.
Complete the form. The field descriptions are below.
| Field | Description | Valid Values |
|---|---|---|
Lender Email Address | The email address associated with the Lender counterparty account. | Must be a valid email address of an existing account in the system. |
Borrower Email Address | The email address associated with the Borrower counterparty account. | Must be a valid email address of an existing account in the system. |
Payout Currency | The currency in which the loan will be paid off in. | Currently we only support USD. |
Withdrawal Address | The Bitcoin wallet address that the BTC funds will be sent to at settlement. | Must be a valid Bitcoin Mainnet address format. |
Fiat Loan Value | The amount of Fiat that is to be borrowed from the lender. | Must be greater than $100 USD. |
Closeout Margin | The percentage of the Fiat Loan Value at which the loan will automatically close out and distribute the current position of Bitcoin to the Lender and Borrower. | Must be greater than 100%. |
Maintenance Margin | The percentage of the Fiat Loan Value at which additional collateral will be required to bring the contract collateral value to the initial collateral value. | Must be greater than the Closeout Margin. |
Initial Margin | The percentage of the Fiat Loan Value that is required to fund and execute the loan contract. | Must be greater than the Maintenance Margin. |
Interest Rate | The Annual Interest Rate the loan contract will be paid back at. | Can be 0% or greater. |
Loan Term | The number and type of periods that the loan contract will be enforced. | Must be 1 or greater and can be hours, days, months or years. |
Compoundings Per Year | How many compound periods per year. | Must be 1 or greater. |
Once you click Create Contract, you will see a notification that the contract was created and the ID of the contract.
If you click the X in the message, you will be returned to the main ARC dashboard. Here you will see all of your contracts. Totals are accumulated at the top where you can see at a glance how many contracts are in which states:
| Summary | Description |
|---|---|
Total | The total number of contracts to date you have been a counterparty to. |
Active | The number of contracts that are currently active. |
Needs Funding | The number of contracts that are awaiting funding by the borrower. |
Needs Signature | The number of contracts that need to be approved by either counterparty. |
At Risk | The number of contracts that are in a margin call. |
Outstanding Amounts | The current amount of Bitcoin and USD that is outstanding in active contracts. |
At Risk Amounts | The current amount of Bitcoin and USD that is associated with contract that are in a margin call. |
You will also see a list of current contracts and the current state the contract is in. Each contract row is clickable, which will take you to a specific view for that contract based on the current state.
Clicking on a contract row takes you to the contract details page. In this case, the contract is in a created state and is awaiting signatures. Since it is in a created state, both counterparties can edit the contract. Once the contract is approved by a counterparty, the only edits that can be made are to the Withdrawal Addresses for either Counterparty.
Clicking the Edit button will take you to the Edit Contract form. The same rules apply for the fields above.
Clicking Delete will cancel a contract. Once cancelled, it can no longer be edited or executed.
Clicking the Agree button at the bottom signifies that you as the Lender or Borrower agree to the terms above and are willing to participate in the contract. Once you click Agree, you will get a notification depending on the number of approvals on the contract. If you are the first to agree, you will see a notification that the contract is awaiting approval of the other counterparty. If you are the second counterparty to agree, the notification will specify that the contract will start the execution and it could be several minutes to an hour for the execution environment to start. The Borrower will need to fund the contract before the contract is activated. The Borrower will receive an email when the deposit address is created.
Once the contract execution environment is available and a Bitcoin deposit address is created for the contract, the Borrower will receive an email stating the deposit address is available and can proceed with depositing the initial Bitcoin to fund the contract. On the details page, the Borrower will see the following view. The user can scan the QR code with their mobile device wallet app or copy the deposit address and paste into the wallet app.
If the price of Bitcoin drops enough to go into a margin call state, the Borrower will need to add Bitcoin collateral. On the contract details view, the Borrower will see a similar view to the Initial Deposit view, and will do the same sort of operation. Scan the QR code with the mobile device wallet app or copy and paste the deposit address and send the required amount of Bitcoin to the contract's deposit address.
When a contract is active, both counterparties can view the current performance of the contract. There are several sections to the contract details page.
| Section | Description | Who sees |
|---|---|---|
Loan to Value | The chart depicts the current loan to value of the contract. | Borrower and Lender |
ARC Lightning Channel | The chart depicts the current balance of collateral in the secure channel, which acts as the escrow account. | Borrower and Lender |
Bitcoin Price | A chart showing the price of Bitcoin over the life of the contract. | Borrower and Lender |
Risk Exposure | A chart showing the reduction of risk. Compares the ARC methodology vs hourly reconciliation vs daily reconciliation. | Lender only |
Contract Transactions | A table of all of the transactions moving funds between the counterparties while auto-reconciliation. | Borrower and Lender |
Contract Terms | A table showing the agreed upon terms for this contract. | Borrower and Lender |
On-chain Transactions | A table showing your on-chain transactions associated with this contract with links to view the transactions in the Mempool. | Borrower and Lender |
The Loan To Value chart has multiple parts to it.
| Section | Description |
|---|---|
Expiration notice | Shows how much longer the contract will be in effect. |
Interest Accrual | Shows the amount of interest accrued to date. |
Total collateral position | Shows the current contract LTV based on all of the collateral in the secure channel. |
Initial collateral | Shows the collateral value that the contract was established at. |
Margin call | Shows the point at which a contract would go into margin call based on the value of the collateral. |
Close out | Shows the point at which a contract would immediately terminate. |
Loan amount | The amount of Bitcoin and USD that the loan was created for. |
Total value in channel | The amount of Bitcoin and USD that are currently represented as collateral in the secure channel. |
Reserve collateral | The amount of Bitcoin and USD that are held on the Borrower's side of the secure channel that could be pulled in if the value of Bitcoin drops. |
Loan collateral | The amount of Bitcoin and USD that are held on the Lender's side that represents the amount needed to satisfy the risk tolerance of the Lender. |
This chart represents the current position of the collateral funds in the secure channel.
| Section | Description |
|---|---|
Borrower Balance | The amount of collateral held as reserve collateral in the secure channel. If the price of Bitcoin were to drop, the reserve collateral could be used to maintain the contract at the LTV / margin values set in the contract terms. |
Lender Balance | The amount of collateral held for the Lender in the secure channel. This amount is maintained at the LTV / margin values set in the contract terms. If the price of Bitcoin were to the close out margins agreed upon, this amount would be distributed to the Lender. |
This chart represents the price of Bitcoin since the start of the contract. The green bar represents the price at each block and the purple line represents the closing price at each day. The starting and ending daily prices are the start of the contract and the current price.
This chart is only shown to the Lender and shows their reduction of risk by using ARC. Risk is reduced during times when the Bitcoin price is dropping. By maintaining a reserve collateral amount and automatically reconciling collateral to the lender as the price drops, risk is often greatly reduced vs daily or hourly reconciliations.
This is a table of every transaction recorded when collateral is moved between counterparties.
A simple table showing the agreed upon contract terms between the counterparties for reference and context.
A table of your on-chain transactions. These can be the initial funding of a contract, any additional collateral added, secure channel opening or withdrawals at settlement.
