> For the complete documentation index, see [llms.txt](https://goldilocks-1.gitbook.io/goldidocs/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://goldilocks-1.gitbook.io/goldidocs/interest-rates-and-lending-mechanisms.md).
# Interest Rates and Lending Mechanisms
Borrowers will be able to borrow up to the full valuation of their NFT’s (when there is sufficient available capital locked on the platform). Users will be able to borrow against multiple NFT’s in a single loan. All loans will be fixed term (maximum and minimum terms decided by Goldilocks DAO), and interest rates will scale with the duration of the loan (D), the ratio (U) of the total utilised borrowing capacity of the platform to the total amount of locked capital, a base interest rate (R), and a rate by which the interest rate scales with the loan duration (S) that are determined by Goldilocks DAO.
APR = R + ((SRD/365)\*(1/2+U))
This interest rate function has several important features. Firstly, it sets a minimum interest rate of R, which is determined by Goldilocks DAO, with the aim of remaining competitive and profitable. Secondly, the apr scales with the duration of the loan (at a rate determined by the DAO), reflecting the increased risk of longer term loans and ensuring that short term loans are affordable and attractive to NFT holders. Finally, the apr will also scale with the utilisation rate of the capital locked on the platform. When less than 1/2 of the locked capital is utilised, borrowers will receive a discounted interest rate. When more than 1/2 of the locked capital is utilised, borrowers will pay a higher interest rate.
Loans will be liquidated when borrowers fail to repay their full debt (including interest) by the expiry date of their loan. Liquidators will then be able to pay the outstanding balance of the loan to claim the collateral. In the event that nobody claims the collateral within 5 days of its expiry, the collateral of the loan will be sent to the Goldilocks DAO treasury, and the value of GiBGT will decrease against iBGT (in proportion to the size of the unpaid loan). Goldilocks DAO will then vote on whether and how to compensate GiBGT holders for their loss.
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