> For the complete documentation index, see [llms.txt](https://docs.gage.cash/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.gage.cash/start-here/how-it-works.md).

# How it works

A deal on gage is a pledge with a fixed price on getting it back. Here is the whole thing, with the product's opening example.

## 1 · List

A borrower picks collateral from their wallet: 12.5 NVDA, worth 2,280.00 USDG right now. They set two things.

* **The cap.** The most they will pay to get the NVDA back. The app suggests 90% of value for stocks and positions, 70% for memes. In this example the borrower chose 1,824.00 USDG.
* **The term.** 7 or 21 days.

From the cap and the fixed cost they name, the app derives the asking price: what a lender pays to fund the deal. The NVDA moves into escrow. The listing is open until it is funded or cancelled.

{% hint style="info" %}
A listing is not a loan until it is funded.
{% endhint %}

## 2 · Funded

A lender sees the listing on Lend and funds it at the asking price, 1,814.88 USDG, in one step. The USDG is credited to the borrower's balance at once (less the protocol fee, shown before listing). The clock starts: expiry is exactly 7 days from funding.

The difference between the cap and the price is the fixed cost: **9.12 USDG, 0.50% for 7 days**. It is fixed at funding and never changes. There is no interest, no rate that moves, no margin call.

Both parties now earn sGAGE rewards that drip over the 7 days. See [The drip](/rewards/the-drip.md).

## 3 · You choose

On the date, the borrower decides.

|                 | Reclaim                                  | Walk away                         |
| --------------- | ---------------------------------------- | --------------------------------- |
| Borrower pays   | 1,824.00 USDG                            | nothing                           |
| Borrower holds  | 12.5 NVDA again                          | the 1,814.88 USDG they received   |
| Lender receives | 1,824.00 USDG (their 1,814.88 plus 9.12) | 12.5 NVDA, after the grace window |

Reclaiming is allowed any time from funding until the lender claims. After expiry there is a **grace window** in which only the borrower can act. When grace ends, the lender may claim the collateral.

What the collateral is worth at expiry decides which choice is sensible, and it is entirely the borrower's call:

| NVDA worth at expiry | A sensible borrower | Borrower ends with                         | Lender ends with    |
| -------------------- | ------------------- | ------------------------------------------ | ------------------- |
| 2,600.00             | Reclaims            | NVDA worth 2,600.00, minus 9.12 fixed cost | 1,824.00 USDG       |
| 2,280.00             | Reclaims            | NVDA worth 2,280.00, minus 9.12 fixed cost | 1,824.00 USDG       |
| 1,500.00             | Walks away          | 1,814.88 USDG                              | NVDA worth 1,500.00 |

## What never happens

* The contracts never sell collateral. There is no oracle in the deal path and no liquidation.
* Nobody can move a user's collateral or USDG, delay a reclaim, or accelerate a claim. Not the team, not a multisig, not an upgrade. The contracts have no owner and no upgrade path.
* Anything owed to you is credited to a balance you withdraw yourself. Nothing is pushed to a wallet.

## Next

* [No liquidation, defined](/start-here/no-liquidation.md)
* [Two lanes: stocks and memes](/start-here/two-lanes.md)
* [The decision at expiry](/borrow/the-decision.md)


---

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