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OTC

Tenor OTC enables borrowers and lenders to structure bespoke agreements outside standardized markets. The feature combines the flexibility of over-the-counter (OTC) negotiation with the benefits of onchain settlement. This is particularly valuable for currencies, risk profiles, or collateral that don't align with liquid market structures.

How to Enter an OTC Agreement​

To enter an OTC agreement, borrowers and lenders can either browse through existing OTC offers, create an offer with specific parameters or request a quote from potential counterparties like vault curators, lending desks, and funds. The user can choose to broadcast the offer/request to all available counterparties or limit it to a whitelist.

OTC Inbox​

When a counterparty receives an offer or a request, they are notified through Tenor’s OTC inbox. Through the inbox, they can accept, decline, or negotiate proposals directly with the sender. The parties can negotiate until they agree on the terms, at which point the deal is settled onchain.

Create an Offer​

When creating an OTC offer, a user is required to provide the following information:

  • Lend/borrow currency and amount
  • Collateral asset(s) and amount (if borrow offer)
  • LLTV
  • Oracle
  • Term
  • Desired APR

In the illustration below, the borrower creates an offer, broadcasts it to the market, and it is ultimately accepted by Curator 4.

Create an Offer

Request a Quote​

For more flexibility, a user can request an offer by providing only:

  • Lend/borrow currency and amount
  • Collateral asset(s) and amount (if borrow offer)

Counterparties can then propose an LLTV, oracle, and APR.

In the example below, the borrower requests a quote from the curators on their whitelist. Each curator returns an offer, and the borrower accepts the offer from Curator 4.

Request a Quote

Delayed Liquidations​

OTC agreements support delayed liquidations, allowing borrowers to define a grace period that begins when the maximum LTV is breached. During this period, they can either repay their position or add additional collateral to prevent liquidation.

Borrowers have flexibility in setting the duration of the grace period. However, lenders may require a lower liquidation LTV to offset the increased price risk associated with the grace period.