BNPL Loans

Detailed explanation of the Irion loan lifecycle and mechanics.

Introduction

At the core of the Irion experience is the BNPL (Buy Now, Pay Later) credit model. Unlike traditional DeFi loans that require collateral management by the user, Irion BNPL is designed to be a discrete, transaction-focused financing tool.

The Loan Lifecycle

1. Initiation (Checkout)

When a shopper selects "Pay with Irion", the BNPLCredit contract:

  • Validates the shopper's CreditScore.
  • Checks if the purchase amount is within the available_credit limit.
  • Calculates the initial interest and repayment schedule.
  • Triggers the MerchantEscrow to pay the seller.

2. Active State

Once approved, the loan enters the Active state.

  • Interest Accrual: Interest is calculated based on the shopper's tier and the loan duration.
  • Repayment Schedule: While Irion supports flexible repayments, users are encouraged to follow the suggested installments (e.g., bi-weekly).

3. Repayment

Repayments are made in USDC:

  • Users can make partial or full repayments via the Irion Core dashboard.
  • The BNPLCredit contract distributes the principal back to the LendingPool and the interest to pool participants.

4. Closure

A loan is Closed when the full principal and interest are paid.

  • Closing a loan triggers a positive reputation event in the CreditScore contract.

APR and Interest

Irion uses a risk-adjusted APR model:

VariableDescription
Base RateSet by the LendingPool based on utilization.
Risk PremiumAdded based on the borrower's CreditScore tier.
Protocol FeeA small percentage (e.g. 0.5%) for protocol maintenance.

Defaults and Liquidations

If a loan remains unpaid past its due_date:

  • The account is flagged as Overdue.
  • The CreditScore begins to degrade exponentially.
  • If the grace_period (usually 30 days) expires, the account is marked as Defaulted.

[!CAUTION] A default on the Irion protocol is permanently recorded on the Algorand blockchain and will result in a global blacklisting across all Irion-enabled merchants.