# SmartLending
### Overview
SmartLending lets holders borrow against the on-chain backing value of an eligible SmartDeFi™ token.
That means you can access liquidity without selling or burning your token.
When a loan starts, the protocol locks the token as collateral and releases the equivalent value in the token's backing asset.
SmartLending is built on [Asset-Backing](/smartdefi-tm-platform/smartdefi-protocol/asset-backing.md).
Loan value comes from the token's on-chain backing data.
### How it works
1. Deposit an eligible SmartDeFi™ token as collateral.
2. Receive the token's current backing-based loan value.
3. Repay within **30 days** with **no interest**.
4. If needed, extend the loan for another 30 days by burning **0.1%** of the collateral.
{% hint style="warning" %}
Extend the loan before the 30-day deadline. If the deadline passes, the loan defaults and the collateral is burned.
{% endhint %}
{% hint style="success" %}
Collateralized tokens can continue to benefit from asset-backing growth while they remain inside the contract. That backing growth is what makes SmartLending interest-free.
{% endhint %}
### How loan value is calculated
The loan uses the token's current on-chain backing value when the loan starts.
The payout is made in the token's backing asset.
For example, if a token is backed by WBNB, the loan is paid in WBNB.
SmartLending does not depend on external price oracles to value collateral.
### Simple example
Assume you deposit **1,000 tokens**.
Assume each token has **0.02 WBNB** of backing at the time the loan starts.
Your loan pays out **20 WBNB**.
If you extend the loan once, the protocol burns **0.1%** of the collateral.
For **1,000 tokens**, that extension burns **1 token**.
### Loan lifecycle
#### Start a loan
The protocol locks your token as collateral.
It then releases the equivalent value in the token's backing asset.
#### Repay the loan
You can repay in one transaction or in batches.
As you repay, collateral can be released in batches.
#### Close the loan
When the loan is fully repaid, the remaining collateral returns to your wallet.
#### Extend the loan
You can extend the loan once for another **30 days** by burning **0.1%** of the collateral.
#### Default
If the deadline passes without repayment or extension, the loan defaults and the collateral is burned.
### Why people use it
SmartLending gives holders access to liquidity without exiting their position.
Common use cases include:
* Covering short-term liquidity needs
* Reallocating capital without selling
* Accessing backed value while keeping exposure to the token
### Why the model is different
SmartLending does not rely on external price oracles for collateral ratios.
Loan value comes directly from the token’s on-chain backing data. That removes a major source of oracle-based risk.
{% hint style="success" %}
The loan logic, backing value, and collateral handling all live inside the same protocol design.
{% endhint %}
### Backing growth vs reflections
These two mechanics are different.
**Asset-backing** can still grow while the collateral remains inside the contract.
**Reflections** do not accrue while the token is locked as collateral.
### Common questions
#### Which tokens are eligible?
SmartLending works with eligible SmartDeFi™ tokens that have the feature enabled.
#### Is there a tax for taking a loan?
No loan tax applies by default.
If the token itself has reflection tax logic, that reflection behavior can still affect the process.
#### What asset is the loan paid in?
The loan is paid in the token's backing asset.
For example, a token backed by WBNB pays out in WBNB.
#### Why does the token disappear from the wallet?
The token is locked inside the lending contract as collateral.
For example, if the token is backed by WBNB, the loan is paid out in WBNB while the token remains held by the protocol.
#### Do tokens inside SmartLending receive reflections?
No.
While the token is held as collateral inside the smart contract, it does not receive reflections.
#### Can I repay in batches?
Yes.
You can repay in multiple transactions. As you repay, collateral can be released in batches. Once the loan is fully repaid, the remaining collateral returns to your wallet.
#### What happens if backing changes during the loan?
The loan starts using the token's current backing value at the time the loan is opened.
Backing can still change while the collateral remains inside the contract.
### Related pages
* [Asset-Backing](/smartdefi-tm-platform/smartdefi-protocol/asset-backing.md)
* [SmartDeFi™ Launchpad](/smartdefi-tm-platform/smartdefi-protocol.md)
* [Backing](/smartdefi-tm-platform/token-launchpad/sdscan-tool/backing.md)
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