Issue and service a Loan

Issue a simple loan on the deployed ACTUS Protocol contracts and progess its state

Scenario

This guide covers a simple workflow for off-chain order creation and on-chain issuance & settlement. The creator forges "orders" that represent offers to go into contractual relationship with a counterparty under specified terms. These orders could be used to create a simple OTC market.

In the scenario we have a creator, which is the lender and a counterparty which takes the role of the debtor. An order for a loan of 1000 DAI at 5% annual interest is created. The debtor countersigns the order and submits it to the blockchain.

In this guide you will:

• Define the terms of the asset

• Issue the asset through ACTUS Protocol

• Service the asset by paying the principal of the loan to the debtor (counterparty)

Define the Terms

We assume you have completed the Getting started guide.

First, set yourself as the creator, optionally set the address for the counterparty (the party that will take out the loan) if you know it in advance and choose a template from the available templates.

To speed up things up, you can use the PAM terms from our example repository.

import { AP } from '@atpar/protocol';

// -------------------------------------------------------------
// refer to the "Getting started" section for initializing ap.js
// -------------------------------------------------------------

const creator = (await web3.eth.getAccounts())[0];
const counterparty; // address of counterparty
const anyone = (await web3.eth.getAccounts())[2] // used to make calls that could be made by any address

// Terms for a simple PAM-based loan with monthly interest payments
const PAMTerms = require('./terms.json'); 
const terms = {
    ...PAMTerms,
    currency: '<ADDRESS>' // address of ERC20 token to use as settlement currency
}

Set up the asset initialization parameters:

// set up ownership structure
const ownership = {
    creatorObligor: creator, // has to fulfill all obligations for the creator side
    creatorBeneficiary: creator, // receives all positive cash flow of the creator side
    counterpartyObligor: counterparty, // has to fulfill all obligations for the counterparty
    counterpartyBeneficiary: counterparty, // receives all positive cash flow for the counterparty
}

Use the appropriate Asset Actor contract (in our case the PAMActor) to initialize and register the new asset on chain:

const initializeAssetTx = await ap.contracts.pamActor.methods.initialize(
    terms, // Asset Terms
    [], // optionally pass custom schedule
    ownership, // Ownership structure
    ap.contracts.pamEngine.options.address, // Asset engine contract addres
    ap.utils.constants.ZERO_ADDRESS // admin address (optional)
).send({from: creator})

Maintaining the asset

Now the lender has to pay the principal of the loan to the debtor. The lender has to set sufficient allowance for the AssetActor, such that the Actor contract can transfer the principal amount to the borrower on the lenders behalf. If the AssetActor is not able to transfer the principal (e.g. due to insufficient allowance or insufficient funds) the Actor contract will transition the asset to non-performing (risking additional penalty payments or contract default).

// -------------------------------------------------------------
// settle the initial exchange as the lender (creator)
// -------------------------------------------------------------

// obtain the next obligation
const nextScheduledEvent = await ap.contracts.pamRegistry.methods.getNextScheduledEvent(assetId).call();

const { eventType, scheduleTime } = ap.utils.schedule.decodeEvent(nextScheduledEvent);

// assume scheduleTime >= Math.round((new Date()).getTime() / 1000);
// pre-payments are currently not supported

// Approve actor to pay settlement
const amount = terms.notionalPrincipal;
const currency = terms.currency;
await ap.contracts.erc20(currency).methods.approve(
    ap.contracts.pamActor.options.address, 
    amount
).send({from: creator});

// progress the asset
await ap.contracts.pamActor.methods.progress(assetId).send({from: anyone});