Loan Lifecycle

CONFIDENTIAL & PROPRIETARY © 2025 Inkwell Finance, Inc. All Rights Reserved. This document is for informational purposes only and does not constitute legal, tax, or investment advice, nor an offer to sell or a solicitation to buy any security or other financial instrument. Any examples, structures, or flows described here are design intent only and may change.

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Overview

Every Leviathan loan follows a defined lifecycle managed by the leviathan-core Solana program. Each stage has explicit entry and exit conditions enforced on-chain — loans cannot skip stages or transition without meeting the required criteria.

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Lifecycle Stages

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1. Application

The borrower submits a loan application specifying:

• Requested capital amount and term
• Intended use of funds (which protocols, chains, and strategies)
• Revenue sources that will service the debt

The application is recorded on-chain as a loan account in PENDING state.

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2. Underwriting

The protocol’s credit scoring system (leviathan-score) evaluates the borrower:

• On-chain credit score is queried or computed
• Risk tier determines eligible terms, rates, and limits
• Off-chain ML models may contribute additional analysis via oracle feeds

Underwriting is not a manual approval — it is a programmatic assessment based on the borrower’s on-chain history and credit profile.

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3. Approval

If the borrower meets the credit criteria, the loan transitions to APPROVED state:

• Loan terms are finalized (principal, rate, term, repayment cap)
• Policy parameters are set (whitelisted destinations, daily limits, allowed functions)
• InkPact agreement hash is recorded on-chain (see below)

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4. Funding

Capital is drawn from the lending pool (leviathan-pool) and deployed:

• Pool reserves are checked for available liquidity
• Funds are transferred to a policy-gated dWallet on Sui
• The borrower’s policy sandbox is activated with the approved destination set

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5. Active

The borrower operates within their policy sandbox:

• Session keys enable trading and operations without per-transaction lender approval
• Keepers monitor positions and enforce health checks
• All borrower transactions are verified against policy by leviathan-verifier

Revenue begins flowing through RevenueSplitter contracts on EVM chains, with splits automatically directing a portion to loan repayment.

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6. Repayment

As revenue accumulates:

• Revenue oracles report repayment progress back to Solana
• The loan’s outstanding balance decreases
• Borrowers may also make voluntary additional repayments

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7. Completion

When the repayment cap is reached or the term expires with full repayment:

• The loan transitions to COMPLETED state
• Policy restrictions on the dWallet are released
• Remaining capital returns to the borrower’s full control
• Pool depositors’ share of returned capital (principal + interest) is reflected in LP token value

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Default Path

If a borrower fails to meet repayment obligations:

• Health checks detect the shortfall
• The loan transitions to DEFAULTED state
• The protocol can initiate enforcement actions through the dWallet
• Non-performing loans may proceed to NPL auction

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Policy Enforcement

Throughout the active phase, the borrower’s capital operates within a policy sandbox:

• Whitelisted destinations — only pre-approved contracts and addresses can receive transactions. Attempts to interact with non-whitelisted targets are rejected before signing.
• Daily limits — time-bounded caps on transaction volume prevent rapid capital extraction, even to approved destinations.
• Function-level controls — policies restrict not just which contracts are callable, but which specific functions. A borrower approved for trading may be blocked from withdrawal functions on the same protocol.

Policy parameters are immutable for the duration of the loan unless modified through governed on-chain mechanisms.

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Keeper Automation

Keepers are automated agents that perform time-sensitive protocol operations: Keepers operate through delegated execution — they have permission to call specific protocol instructions but cannot access borrower funds directly.

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InkPact Agreements

InkPact provides on-chain agreement verification:

• A cryptographic hash of the loan agreement document is stored on-chain at approval
• Both parties can independently verify that the on-chain terms match the signed agreement
• The hash is immutable once recorded — neither party can claim different terms after the fact

InkPact does not store the agreement itself on-chain — only a verifiable fingerprint. The full document is maintained off-chain by the parties.

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NPL Auctions

When a loan enters default and cannot be recovered through standard enforcement:

• The non-performing loan position is listed for auction
• Qualified participants can bid on the distressed position
• The winning bidder assumes the loan’s rights and enforcement capabilities
• Proceeds from the auction are distributed to affected pool depositors

NPL auctions provide a market-based resolution mechanism, allowing the protocol to clear defaulted positions without indefinite deadlock.