Transfers crypto value for lending to banks and financial institutions
There is a need for new money in the world. Banks want to have new money to issue loans and fulfill obligations to customers.
And at this time, 188 billion dollars are already stored on the blockchains and this value is increasing.
And at the same time, an innovative technology time-lock, LILO and DCRM from Fusion Foundation has already appeared that can be used to transfer the financial digital value stored on the blockchains to the food-grade financial system, for example, for lending to banks.
So, let’s see how it works. Time-lock technology allows you to make a mandrel of digital value at a given time, and LILO and DCRM allows you to send Stablecoin USD from crypto bag №1 to crypto wallet №2 and keep digital value there for example, for a period of time-lock 1 year. And after 1 year, time-lock, LILO and DCRM will unlock Stablecoin USD and send it back to wallet №1.
In Fusion, this operation (smart contrast) is made through a user-friendly interface, in the picture one of its interfaces:
So, let’s consider how this can be used to transfer the digital value stored on the blockchains for lending to the banking system.
Case: Fusion transfers crypto value for lending to banks and financial institutionsCase: Fusion transfers crypto value for lending to banks and financial institutions
This case is aimed at:
• creates the ability to transfer the financial value of digital assets from the blockchain to the traditional banking system
• provides interest income from the banking system
• relieves the formalities connected with registration of credit agreements
• ensures the operation of interbank lending based on blockchain technology
• creation of a platform for the international Bank lending market
• for holders of digital assets, makes an expanded selection of offers for lending to banks and the interbank lending market
To implement this lending option, Custodian is built into this scheme.
Custodian — an organization (most often a Bank) that provides custody and management of securities on behalf of its customers, and can provide other services, including clearance, cash management, lending in foreign currency and in the form of securities. For these services, the client is obliged to pay a Commission to the custodian, the amount of which is determined by the contract for the provision of custodial services.
Next, for convenience, I will use the “pseudo” name for example, Custodian Gemi Trust. Crypto custodians are licensed agents for the exchange and storage of digital assets and manufacturer Stablecoins USD which are secured by the us dollar in a ratio of 1:1 and the dollar equivalent stored in his Deposit.
In the proposed scheme, the Custodian is the Trustee of the crypto lender in the credit transaction between the digital asset and the fiduciary borrower.
The custodian produces the records deposited Stablecoins USD for credit transactions and on this basis to translate the same amount in USD in the fiduciary system.
Custodian performs trust management of the creditor’s crypto capital through smart credit contracts based on Fusion technology and transfers the funds stored on its deposits to financial institutions and banks with which it will enter into contractual relations and provide options for credit transactions on the Fusion (4) swap platform.
1. Ordinary people and firms send USD to Gemi Trust and exchange 1:1 for Stablecoins USD.
2. Custodian store on Deposit natural USD and produces (2) transfer of 1:1 Stablecoins USD to the customer’s wallet Fusion.
3. Crypto custodian Stablecoins USD, decided to give part of their funds for lending transactions.
4. For this crypto holder chooses (4) suitable conditions of a credit transaction on the swap Fusion framework.
5. information about the number of blocked Stablecoins USD comes Custodian Gemi (5)
6. smart contract sends information about the number of blocked Stablecoins USD to the credit pool (6)
7. from the crypto holder’s Deposit, Custodian Gemi transfers USD to the selected crypto holder’s credit pool and sends USD to the borrower (7)
8. in this lending scheme, all customers of the credit transaction are protected by Federal Deposit Insurance Corporation (FDIC) USA.
Next on the scheme, we consider how the crypto holder will receive % on its contribution.
9. the borrower (9), in accordance with the loan agreement, transfers USD interest to the Custodian Deposit account of the loan (10)
10. Custodian produces 1:1 additional amount of Stablecoins USD
11. Custodian sends (11) interest to Stablecoins USD to the borrower’s Fusion crypto-wallet.
12. borrower (12) completes the loan transaction the borrower and returns the “body-loan” borrowed funds to the loan account of the Custodian loan agreement (13)
13. credit smart contract (14) in accordance with the terms of time-lock is triggered at the appointed time (15) and Stablecoins USD are returned (16) to the disposal of the crypto lender
This lending scheme allows you to transfer the value of a digital crypto asset to a credit Deposit of an ordinary Bank and ensure that the holders of crypto values receive % of the profit from the Deposit on the same terms as for ordinary depositors. In this scheme, there is an automatic underwriting, that is, after the expiration of the loan agreement, the credit smart contract automatically “unfreezes” the funds of the crypto holder in Stablecoins USD and this becomes available again for the holder. This is a very reliable lending scheme that guarantees timely repayment of funds to the lender.
Credit transactions are conducted through a decentralized mechanism (DCRM) and (LILO) and are not required to transfer crypto-value to an exchange or platform such as Custodian. Also it provides maximum automation of the processes of conclusion of the credit transaction, confirmation of blocked Deposit, send a signal about the transaction Custodian, no paper document flow and absolute 100% reliability of underwriting. This is a new 100% reliability level, previously it was unattainable in any traditional lending operations, this level was first achieved in the world financial practice.
For example, in case of problems (default) on the borrower’s side, the custodian will start the procedure of returning the credit Deposit and receiving the insurance payment, but this will not cause delays for the borrower and there will be no paper bureaucracy.
This option of lending will be positively perceived by banks, as they will be glad that their crypto clients are 100% calm for their deposits and therefore such a scheme can become very popular.
Thanks to new opportunities, the traditional banking system will find a reliable partner and donor in the face of blockchain technology.
The Commonwealth of blockchain technologies with banking technologies will make the entire global financial system more stable.
This will be a global step towards each other, to join efforts and increase the overall stability of financial systems.
Case: THE TRANSFER OF VALUE CRYPTO ASSETS TO LENDING IN THE INTERBANK MARKET
Repo transactions are made for the purpose of short-term lending of banks with money secured by securities. Transactions are made on an auction basis in both us dollars and other fiduciary currencies. Mechanism of REPO transactions implies that for the duration of the provision of funds to securities that serve as collateral become the property to the lender, which simplifies the management of situations in case of failure of obligations by the borrower and reduces credit risk.
In recent years, trilateral repo transactions have become widespread. The parties to such transactions are the lender, the borrower and the custodian Bank.
In a three-way repo transaction, a broker/dealer who has a need for financing receives money on credit in exchange for collateral in the form of fixed-income securities, usually government bonds or Eurobonds.
The counterparties shall sign agreements with each other, stipulating the terms of the loan and collateral, and each of them shall separately sign a contract with the Depositary of the creditor.
The creditors in this transaction are usually the financial departments of corporations, insurance companies, pension funds and investment managers.
Custodian assumes obligations on the quality of the transaction and the cost of collateral, controls all parameters established by the contract. For providing these services, the Depositary’s Custodian takes its Commission.
The claimed method and scheme of lending allows crypto investors to take part in repo credit transactions taking place on the interbank market, as well as to take part in them both ordinary crypto investors and industrial enterprises and ordinary banks located in different countries of the world.
For example, banks in Japan have increased liquidity and that banks do not keep it in their accounts, the Central Bank of Japan introduces a negative rate as a measure to stimulate lending by banks to the economy. In this situation, Japanese banks are looking for opportunities to offer their excess liquidity to the international lending market.
In this scheme: an ordinary Bank of Japan which has free liquidity, enters into a cooperation agreement with Custodian Gemi and transfers USD (20) to its Deposit account, and receives in return (21) Stablecoins GUSD. Next, the Bank or even any private crypto investor chooses a suitable “credit smart REPO contract” (22), and blocks/deposits its digital crypto assets with a Fusion smart contract, which then sends the order to execute the credit transaction to the credit pool (23) Custodian. At this time, borrowers, such as banks from England, Germany or the United States choose through the credit interface (24) for example, on the stock credit exchanges (or through the Custodian monitor) offers to credit REPO transactions.
Further, the borrower through the credit interface of the monitor (24), for example via API Protocol (25) or other data transmission network will send its application for the need for lending to the castellan and creditors for consideration. If approved by kastadian mortgage securities kastadian concludes with the borrower in the REPO transaction and the German Bank sends (28) “collateral securities” for safekeeping Custodian and, in turn, transfer from your loan account (26), USD, “Bank of Germany” (27).
Upon completion of the transaction and receipt by the custodian of the borrowed funds from the borrower (29), the custodian returns the securities and Depositary receipts (28) to the borrower. At the same time, the secured crypto assets of Stablecoins GUSD are unblocked from crypto creditors (30). At the same time crypto investors get from Cascadian on your crypto accounts (31) assessed the percentage of profit in the form of additional Stablecoins GUSD.
This diagram shows an international credit system in which private crypto investors, crypto enterprises, industrial enterprises, custodians, banks, mortgage lenders and other micro credit organizations participate.
• the new financial credit system will have 100% underwriting reliability
• allow custodians to offer operators Stablecoins USD for its clients to obtain Bank % storage crypto wallet Stablecoins USD
• will create a new high level of trust of the population kastadianam operators Stablecoins USD, the population makes sense to buy Stablecoins USD and through this to make a contribution at interest in the conventional banking system — because it increases the reliability and safety of the investment
- at the same time, it will provide an additional source of financing for the global banking system and increase its stability
The presented fin/model makes it possible to create new capital markets on the blockchain, such as, for example, the leasing market, where the custodian selects applications for financing among leasing agencies and places them on the trading floor.
Interest rates on this lending market may be slightly higher than on Bank deposits and custodians will be able to offer in this market a higher yield than in a conventional Bank, and all lending transactions will be protected by 100% refund at the appointed time, it will be underwriting 100%.
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