Texture: Decentralized P2P Token Lending on Solana

TLDR: Texture is a peer-to-peer (P2P) token lending protocol on Solana that enables users to directly borrow and lend tokens without intermediaries. Borrowers can access high loan-to-value (LTV) short term loans by locking collateral, while lenders earn attractive yields by placing offers with their desired terms. Texture offers a unique high-risk, high-return lending experience compared to traditional pooled DeFi lending models.

How Texture P2P Lending Works

Texture allows users to borrow and lend tokens directly with each other, using tokens as collateral for a fixed period of 7 days. Here's how it works:

1. Borrowers lock their collateral tokens to borrow other tokens. They have 7 days to repay the loan with interest, or risk losing the collateral to the lender.

2. Lenders place lending offers specifying the offer size and the offer price (which correlates to the LTV). All offers have the same protocol-set APY per pair. Offers with the highest LTV are given priority and fulfilled first.

The protocol doesn't rely on any oracles in its design. Instead, lenders decide on how much risk (LTV) they are willing to take and are responsible for monitoring and adjusting their positions accordingly.

It's important to note that the protocol is currently in public beta, so users should exercise caution.

Why Use Texture?

Compared to traditional pooled DeFi lending protocols, Texture offers lenders a unique high-risk and high-return (APR > 100%) lending experience.

For borrowers, Texture provides high-LTV (> 70% - 90%) short-term loans with no liquidations. This allows borrowers to hedge a particular token's price exposure or get "degen leverage" with attractive LTV.

Some key benefits of Texture:

• No borrow/lend limits
• No need to worry about pool utilization
• No liquidations
• What you see is what you get

How to Borrow on Texture

To borrow on Texture:

1. Specify the amount of the collateral token you wish to borrow against.
2. View the maximum loan size you can borrow, the corresponding LTV ratio, and the interest amount.
3. Click borrow and take the best (i.e., highest LTV) offers currently available.

You have to repay the borrowed amount and interest within 7 days; otherwise, the lender can claim the collateral tokens you locked. Interest is incurred only if you return the loan.

In situations where your collateral token's price significantly decreases, it may be rational not to return the loan. Texture's P2P loans can serve as a powerful tool to hedge your token holdings.

Check out Texture's Borrow Tutorial for more details.

How to Lend on Texture

To lend on Texture:

1. Set your offer price: Specify how many USDC or SOL (depending on the pair) you are lending per 1 collateral token (offer price). This is a crucial risk management metric, aligning with your risk appetite. Your offer price divided by the collateral token price gives you the LTV ratio, visible in the UI.

   Borrowers take offers with the highest LTV first, so offers with higher LTV are more competitive and taken faster. But bear in mind that higher LTV increases the chances that the loan may not be repaid if collateral token prices drop below your offer price.

2. Set your offer size: Select the amount of USDC or SOL (depending on the pair) you want to lend at the specified offer price. Deposit the corresponding amount to place the offer. You can withdraw your funds until the offer is taken by borrowers. If the offer is taken partially, you can withdraw the remaining amount.

3. Monitor your offers: Regularly check your open offers, as collateral token price fluctuations impact your effective LTVs and risk exposure. Adjust your offers as needed; for instance, relist risky offers as collateral token price approaches your offer price or increase your offer price during market upswings to stay competitive.

4. Check on your loans: If a loan isn't repaid within 7 days, you can claim the collateral. Navigate to the "My Offers" page, select "Active," and use the claim button to retrieve the collateral tokens to your wallet.

Refer to Texture's Lend Tutorial for a more in-depth guide.

Texture's PXLS Reward Points

Users earn PXLS points every time they borrow or lend on Texture. The protocol keeps track of users' total PXLS balance to reward participation in the upcoming Season 2 of PXLS.

While details are yet to be announced, these reward points are expected to provide benefits and incentives to active Texture users. This unique gamified system encourages usage and helps bootstrap liquidity on the platform.

Texture's Features and Roadmap

Some of Texture's key features include:

• Peer-to-peer lending without intermediaries or pooled interest rates
• High LTV loans for borrowers and high APY opportunities for lenders
• No oracles required, with lenders assessing risk themselves
• 7-day fixed term loans with collateral claim option for lenders
• PXLS reward points that gamify the lending experience

Looking forward, Texture is working on several protocol improvements, including:

• Upgrading the UI/UX for cleaner loan and offer management
• Introducing auto-compounding vaults for idle funds
• Expanding to more token pairs and layer 1 blockchains
• Gamified staking of the protocol's governance token (yet to be released)

The team is also actively engaging with external auditors to provide independent security assessments of the protocol.

Texture's Team and Backers

Texture is being developed by a pseudonymous team deeply experienced in DeFi and crypto. The project is backed by notable investors including Maven 11, Fantom Foundation, and Spartan Group.

While still a young project navigating the challenges of DeFi lending innovation, Texture's team appears committed to steady progress, risk management, and building a robust P2P lending protocol over the long term.

Conclusion

Texture brings a fresh peer-to-peer approach to on-chain crypto lending. By enabling direct lending between users without intermediaries, Texture unlocks a unique high risk, high reward dynamic for participants.

Borrowers can access high LTV loans trustlessly to hedge or leverage, while lenders can pursue high yield opportunities by defining their own risk parameters. With the added element of PXLS reward points gamifying participation, Texture is an innovative experiment in DeFi lending worth watching closely.

As with any DeFi protocol, users should exercise caution and do their own research before using Texture, especially while the protocol is still in beta. But for those seeking a novel P2P lending experience with high upside potential, Texture presents an exciting opportunity in Solana's vibrant DeFi ecosystem.