ForTube is a decentralized financial services platform that focuses on the crypto bond market.
The boom in decentralized finance (DeFi) has led to the creation of various DeFi-focused products. Some are made for consumption while others are there to boost the creation of other products.
Take Uniswap and Polkadot, for example. Uniswap is a DeFi product prepared for the end-user while Polkadot, although in the DeFi ecosystem, is meant to support the creation of platforms seeking inter-chain communication.
Others like ForTube are complete systems powered by a dedicated DeFi network called The Force. Below, we’ll discuss ForTube, what it brings to the DeFi table and how it works. Also, we shall look at The Force protocol with a special focus on its strongholds.
What is ForTube?
ForTube is a decentralized financial services platform that focuses on the crypto bond market. The platform seeks to make financial services inclusive and provide global access to all through ForTube cryptocurrency bonds.
Cryptocurrency bonds are a new bond type where crypto tokens are used to pay the bond. It brings two advantages to the virtual currency market; it avails financing in the digital currency market, and it begets products that introduce fixed incomes in the industry while meeting investor needs.
Furthermore, cryptocurrency bonds are based on distributed ledger technology (DLT), which eliminates the need to seek regulatory greenlights for their issuance. The system is made up of an issuer, investor, and rater. The issuer issues the bond by first demonstrating repayment capabilities through collateral.
Investors invest in the bond using USDT, USDC, and DAI stablecoins. Raters provide a rating on bond credit at a fee. ForTube, therefore, brings all-round functionalities into the crypto space.
ForTube’s Key Components
Bond Credit Rating
The platform uses a decentralized registration process to issue bonds with the issuer’s information automatically verified by the network. In addition, credit rating on the platform always takes a bond’s value into consideration.
The rating is geared towards providing a risk reference for investors. Rating involves both the ForTube community and the professional views with community rating enabled by holding the platform’s native currency, FOR.
After being reviewed, the bond is issued in the form of a BondToken. The token is developed using Ethereum’s ERC-20 standards. Moreover, the token acts as a contract having all the agreements embedded.
The token represents debt obligation (the holder is the creditor) and is not divisible. Each BondToken has a value of $100.
In case the pledged amount loses value, ForTube allows for liquidation to mitigate losses. Apart from an asset sinking in value, liquidation can also happen if the issuer fails to repay within the agreed timeline.
The liquidation process takes into account the current debt, target collateralization rate, and the current collateralization rate. The discount rate, collateral price, and the amount before liquidation form part of the liquidation equation.
Reasons for Bond Liquidation
Note that ForTube uses a liquidation that allows the exchange of discounted pledges through its discounted liquidation model. The ForTube liquidation process happens in two scenarios.
In the first one, the debtor is reminded of an impending liquidation when the collateral’s value falls to 80 percent. When it gets to 70 percent, liquidation is ignited. The second situation is when the liquidation is due to a failure in repayment. When the bond expires without full repayment from the debtor, ForTube triggers the liquidation process. The amount liquidated must fully cover the debt and service fees. And liquidated collateral still belongs to the debtor.
Can the Bond be Traded?
Yes. The bonds can be traded on the secondary market. The market allows for a configurable transfer rate and quantity based on a system-generated reference rating. Bondholders and investors have access to crucial information such as credit rating, project interest rate, and basic bond information.
ForTube’s Approach to Community Governance
Since it’s at the development stage, the platform handles governance issues through developers. Currently, the developers decide on supported virtual currencies, credit rating setting, bond duration, repayment grace period, among other parameters.
However, being a decentralized platform, ForTube is keen on introducing community involvement in governance issues.
ForTube’s Native coin, FOR, and The Force Protocol
Before discussing FOR, let’s take a look at The Force.
What is the Force Protocol?
The Force Protocol is a cryptocurrency-based financial platform powered by major blockchain networks. It is made up of DeFi-focused components to provide inclusive, transparent, and secure decentralized financial services to a global audience.
The Force’s Key DeFi Technical Aspects
- APEC – Also called the basic component, APEC (Assets Protected Elastic Contracts) sits at the core of the protocol. It handles decentralization, contract development, and asset ownership. Generally, it takes care of anything between asset, logic, and data.
- Blockchain enquiring, auditing, and messaging system (BEAMS) – This module takes care of the blockchain limit, such as inter-chain communication. BEAMS enquires, audits, and provides messaging services from outside the chain.
- Financial component – This acts as the defense layer of The Force Protocol. It includes things like global emergency lockdown (GEL) for all contracts dealing with asset changes. Cooperative automatic lockdown mechanism (CALM) and multisig admin keys (MAK) are other components of The Force’s financial component.
CALM is an off-chain risk control mechanism while MAK is used to set contract router update permission, global lock flag, among other admin-related parameters.
- Tokenized protocol – ForTube falls under this category. The category also includes ForTube Bank, a crypto loan platform.
- Decentralized Stablecoin protocol – Called QIAN, it’s designed to power the creation of stablecoins.
FOR is The Force Protocol’s native token. It is used as a governance token on the network. Furthermore, FOR holders can participate in voting on ForTube’s governance proposals, participate in the QIAN ecosystem on things like stability adjustment and global debt auction.
With Ethereum being overwhelmed by DeFi platforms, there’s a need to create systems and networks focused on the DeFi scene for the space to gain massive adoption. The Force Protocol proves it’s possible to power the entire ecosystem by providing a DeFi technology stack complete with tokenized protocols like ForTube, a distributed stablecoin platform like QIAN, a financial component, and a basic element to interact with smart contracts.