Glossary

Core Protocol Terms

Textile Protocol – The decentralized lending framework that enables programmable credit pools
Debt Pool – A smart contract where borrowers define loan terms and lenders provide liquidity
Debt Token – ERC-20 tokens representing proportional ownership in a debt pool and entitlement to repayment plus interest
Redemption Period – The specific interval at which participants can withdraw their principal and interest
Compounded per Second – The method of continuously calculating and accruing interest in Textile pools

Borrower – An individual or entity that opens a debt pool and borrows capital under defined terms
Lender / Capital Provider – A participant who deposits funds into a pool to earn yield through debt tokens
Deal Manager – An intermediary who validates deals, manages compliance, and earns fees for structuring transactions

Max Pool Size – The upper limit of capital that can be deposited into a pool
Min Stake Size – The minimum amount required to participate in a pool
Interest Rate – The agreed rate paid by borrowers on borrowed funds
Interest Payment Interval – The schedule by which borrowers make interest payments (monthly, quarterly, etc.)
Protocol Fees – Charges applied by Textile (e.g., deposit fee, repayment fee) that support ecosystem functions
Success Fee – Compensation earned by a deal manager if a transaction is successfully executed

Secondary Market – The open marketplace where debt tokens can be traded
Liquidity – The ease with which debt tokens can be bought or sold without affecting price significantly
AMM (Automated Market Maker) – A decentralized exchange mechanism where protocol fees are rotated into discounted buy positions
Collateral – Assets pledged by borrowers to secure a debt pool, mitigating default risk

Underwriting – The process of assessing borrower risk and structuring loan terms
Default – A situation where a borrower fails to meet repayment obligations
Due Diligence – The comprehensive appraisal of a borrower and their proposed terms before capital deployment
Risk-Reward Profile – The balance between potential returns and associated risks for a given debt pool