> For the complete documentation index, see [llms.txt](https://docs.drops.co/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.drops.co/lending-pools/nft-lending-pool.md).

# NFT Lending Pool

Lending pools are at the core of the Drops protocol lending model. Each lending pool consists of NFTs that can be used as collateral and tokens that can be borrowed. 

NFTs are grouped into pools by their risk profiles - tranches.

**Ocean** (Senior tranche) - blue chip NFTs with highest liquidity, low risk collateral.

**Sea** (Mazzanine tranche) - Mid cap NFTs with medium risk collateral.

**Lake** (Junior tranche) - Lower cap NFTs with high risk collateral.

By using isolated pools, lenders can choose to which particular NFT collections they want to be exposed to. 

NFT collateral value is determined by the oracle, borrowers can get 30-60% loan against their collateral value.

Loans have no expiry dates and can remain solvent as long as the user does not exceed the borrowing limit. Interest rates are calculated algorithmically based on the utilization rate of an asset.

![Lending pools structure](https://lh5.googleusercontent.com/_8FEKzVWY0N1-hb2jG9mMk5nwVJWfxrSq9MNCLce2YEiSeSBaaBEZZoj627rlBP6EW5x8pco4lDg71RFHDbXLRQAj-3DhFHboreatjlmE-TzXwRGqVZG7Jb2r7ETFQcFtExFS9L2ShFm)


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