Honey Finance is composed of multiple lending markets. Each collection has an associated lending market which must be approved by veHONEY holders.
Lending markets match borrowers and lenders of a same collection. Lenders supply liquidity (USDC) to an NFT collection's associated lending market. Borrowers can borrow this supplied liquidity by depositing their NFTs as collateral.
There are three main participants in Honey lending markets:
Borrowers:
Lenders
Admins
Borrowers
Create a new position by depositing NFT collateral into a lending market and borrowing liquidity from lenders. Interest accrues on open positions with a variable interest rate. Each position has a loan to value ratio as well as a liquidation threshold. If the value of the collateral goes down, or the loan is not sufficiently paid down, the NFT can be liquidated.
Create lending markets on the platform and set an admin fee. Liquidations and interest repayments will include this fee, generating revenue for the market admin. Admins can be DAOs, projects, or individuals.