GIP-42: Enable New Pool Type - Callable Loans

Authors : @Jake @aaron

Summary : The Warbler Labs team proposes bringing a new loan structure to the Goldfinch protocol — a callable loan, which gives Backers the right to “call back” their invested capital. Borrowers are required to return 100% of this “called capital” at the end of a “call period.” For the initial design, call periods will occur every three months and call requests must be submitted at minimum 60 days before the end of the call period.

Motivation : Liquidity is essential to crypto investors and callable loans allow investors to redeem their investments early, if they so choose. Based on interviews with existing and potential Goldfinch lenders we have learned that many investors have a strong preference/requirement for quarterly liquidity in their investments. Callable loans are an existing structure in traditional finance that achieves the outcome desired of our investors by giving them the right to “call back” their capital at regular intervals.

How do callable loans work?

Callable loans are a suitable option for borrowers with short-term assets that can be liquidated when investors want to redeem their capital. Callable loans are used in traditional finance, but their structure and terms are usually customized to match the capital structure of the borrower.

As an example deal:

  • Borrower: Fintech X, who provides buy-now-pay-later (BNPL) loans to customers with a maximum tenor of 30 days
  • Goldfinch Deal Terms: 2 year loan with a quarterly call period where investors must serve their call notice at least 60 days in advance

Fintech X borrows from Goldfinch in order to offer more BNPL loans. If an investor calls back their position early, Fintech X will know at least 60 days in advance. So they wait to get repaid on their 30 day BNPL loans and use that cash to repay investors’ called capital.

What are the benefits to investors?
Callable loans give investors the option to exit investments early. Some lenders need this flexibility in order to meet their investors’ redemption requests. Others simply prefer the flexibility to reallocate their capital if personal or market conditions change.

Why is now a good time to launch callable loans on GF?

The right to call back capital is a tough sell for most borrowers, who often either refuse such terms or demand a significantly cheaper cost of capital in return. However, credit markets today are incredibly tight and lenders have more negotiating power. Given the conditions, borrowers are willing to offer more investor-friendly structures, like callable loans, while still paying high yields (e.g. 12% or higher).

Specification & Requirements

  • Lenders with UID can submit call requests to recall their principal at any point in time
  • Repayment of call requests happens once every three months on a set date
  • Call requests must be received at least two months prior to a repayment date. Any calls that occur less than two months before the closest upcoming repayment date will be paid on the second closest upcoming repayment date. Depending on the time of the request, borrowers will receive their capital back within two to five months
  • The illustration below shows a sample deal that demonstrates how the two to five month payback period works. For example, lenders who want to be repaid at the end-September call event will need to have submitted their call during May, June or July. If you submit a call on the earliest possible date in the window (May 1), the time-to-repayment is five months; if you submit on the last possible day of the period (July 31), the time-to-repayment is two months

  • Lenders’ called capital becomes withdrawable once the due date of the call requested capital has been reached and the borrower has repaid the called capital. Lenders may withdraw their pro rata portion of any repaid called capital after the due date, and they do not need to wait for the entirety of the called capital to be repaid.
  • Once a lender submits a call request, they continue to receive interest on their capital until it is withdrawable by the lender.
  • Lenders can call any portion of their principal when they submit their request.
  • If a borrower is late on any payments, the ability to submit call requests will remain active

Borrower Repayments Waterfall Mechanics

  • Borrower repayments are applied pro-rata to outstanding balances in the following order:
    → (1) All existing interest obligations
    → (2) All existing call request principal obligations which have been locked in, in order of the call request period they were submitted in.
    → (3) All accrued interest up until now
    → (4) Remaining principal balance
  • Notes:
    • Since initial Callable loans will be bullet loans, in most cases only (1), (2) & (3) apply
    • In the case of early principal repayments, the full waterfall applies, including (4)
    • The addition of (2) in the repayment waterfall differs from our current deals.

Benefits :

  • Goldfinch investors will have the ability to fully exit their positions prior to maturity
  • The right to call capital aligns with the demands of crypto investors, who have a strong preference for liquidity. Some investors are restricted from investing in long-term assets and this product feature will allow them to join the Goldfinch ecosystem

Downside :

  • Many borrowers have never issued callable loans before, so lenders must be confident in borrowers’ ability to administer the new structure

Voting :

  • Yes Vote: Enable callable loans as a structure on Goldfinch
  • No Vote: No change

Flexibility for investors is the best thing for them. Especially in the crypto market, very often there is a need to transfer liquidity from one pool to another, and with a 60-day notice, the borrowers will feel comfortable.

I believe this type of pools is exactly what we need to attract new liquidity and capital to the protocol. My vote is YES

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Very good offer, beneficial for everyone. And it’s good that they set a notification for 60 days, this is important

My vote is “Yes”. Flexibility in crypto is an important part because the market moves so quickly, so you want to know that you have more tools to work with your assets.

If we had a liquid secondary market for backer positions this probably wouldn’t be required, right? I wonder what was the dynamic on lark market. Were there not enough buyers?

I concur that this could be beneficial for both lenders and borrowers. Nevertheless, we must have faith in the borrowers’ capacity to handle the new arrangement.

Any secondary market is going to be subject to price fluctuations due to available liquidity and broader market interest rates. Callable loans are only dependent on the borrower, so they provide a much stronger avenue of liquidity for lenders.

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I stick to my opinion on this matter, which I already expressed on Discord, so I’ll just repeat myself.

I believe that this is exactly what your protocol lacks and it can really give a boost to the injection of new capital :+1:

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I think that the new pool type is a good and urgent solution that your protocol lacks. And with a 60-day notice for the borrowers will provide confidence.

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my vote - YES , I think everyone will benefit from this, good decision, it is very important that there is a 60 day notice

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As I’ve already told on our server, I fully support this initiative. Judging by the voting results, the New Pool Type will be implemented. Thank you all!

Hi, agree with the fact that the liquidity is very nice for the lender. But it does make our loans less attractive to potential borrowers, maybe causing our growth to slow.

Maybe adding the option for the borrower to ask for more commitment off the lender for a higher percentage.


Thank you for writing this proposal!

We need enable callable loans as a structure on Goldfinch, this will help borrowers redistribute their capital. My voice is “YES”

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Sure i vote “YES”. Team should enable callable loans pool

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Redistribute capital - sound cool
My vote - yes


Flexibility for the investor is a good step to improve the condition of the company

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I vote YES because I want to see this feature in the project.

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That’s a very interesting idea. Perhaps the final solution will be changed slightly in some values, but such a pool is worth adding.


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I want to see that pool. I vote YES

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