Pi-NFTs act as collateral in the lending and borrowing ecosystem on Aconomy, providing a secure and valuable asset to back loans. Here's how the process works:

1. Selection of Pi-NFT as Collateral:

   Borrowers who are in need of funds can choose to use their Pi-NFTs as collateral when seeking loans. The borrower selects a specific Pi-NFT from their collection to serve as collateral for the loan.

2. Proposal Submission:

   Borrowers propose loan terms, including the loan amount, annual interest rate (APY), loan duration, and expiration date. These terms are presented to potential lenders for consideration.

3. Lender Review:

   Lenders, interested in providing loans, review the borrower's proposal, including the details of the Pi-NFT collateral. They assess the borrower's offered collateral in relation to the requested loan amount and the proposed interest rate.

4. Offer and Agreement:

   Lenders may choose to make an offer to the borrower based on the proposed terms. This offer includes the specific loan amount, interest rate, and duration. Alternatively, lenders can create custom offers with unique terms tailored to their preferences.

5. Acceptance or Negotiation:

   Borrowers have the option to accept the lender's offer, negotiate the terms further, or choose a custom offer. Once both parties agree on the terms, a lending agreement is reached.

6. Loan Disbursement:

   Upon agreement, the lender disburses the loan amount to the borrower. The borrower receives the funds and can use them for their intended purpose.

7. Collateral Security:

   Throughout the loan term, the Pi-NFT collateral remains securely locked or escrowed. It acts as a guarantee for the lender that they will be able to recover their loan amount in case of default by the borrower.

8. Loan Repayment:

   Borrowers are responsible for repaying the loan, including interest, within the agreed-upon duration. Failure to do so may result in the lender claiming the Pi-NFT collateral to cover the outstanding debt.

9. Collateral Release:

   Once the borrower successfully repays the loan, including all interest and fees, the Pi-NFT collateral is released back to the borrower, and the loan agreement is considered fulfilled.

10. Default Resolution:

    In the event of borrower default, where they cannot repay the loan, the lender can claim the Pi-NFT collateral as compensation for the unpaid debt. The NFT can then be sold or retained by the lender.
 

In this way, Pi-NFTs serve as a tangible and valuable asset that provides security and trust in the lending and borrowing process on Aconomy. Borrowers can access much-needed funds while lenders have the assurance of collateral, creating a balanced and secure lending ecosystem within the NFT marketplace.