1. What is mortgage loan?
The core of BKEX Mortgage Bao business is mortgage loan, which is a lending method based on cryptocurrency. Users can obtain the mortgage loan service of another cryptocurrency by pledging a certain cryptocurrency on the platform:
1) The borrower is required to provide a certain amount of cryptocurrency as a loan guarantee to ensure the due repayment of the borrowed tokens and interest.
2) If the borrower triggers the forced liquidation line or overdue repayment of principal and interest, the platform will have the right to deduct part of the pledged tokens to reduce the platform loss.
2. Mortgage loan scenario
1) Project operation and maintenance expenses: the project party who holds a large amount of cryptocurrency can obtain necessary liquidity mortgage loan through Mortgage Bao instead of selling tokens to maintain the operation of the project and carry out capital turnover
2) Maintain the value of the current cryptocurrency and invest in another cryptocurrency to realize the increase of investment income
3) Miners pay for electricity bill: in a time of low prices, large electricity bills mean selling large amounts of tokens at low prices, while mortgage loan can help miners keep holding the tokens and solve liquidity problems
4) Quantitative investment and over-the-counter trading: for quantitative investors and over-the-counter traders, they need to hold a bottom position, which means they need to be exposed to the risk of price fluctuation. Using borrowed tokens as a bottom position can well avoid this risk
5) Hedging risk or speculation: when it needs to hedge the risk of rising or falling cryptocurrency price, investors can hedge by borrowing. Or investors can speculate by borrowing when they are short / long on cryptocurrency.
3. Mortgage loan process
1) Step 1: Submit application for mortgage loan to the platform, and create an order;
2) Step 2: The order is approved by platform and the loan is released to the user’s “Wallet account”
3) Step 3: Users can increase pledge in the process of loan to control order risk rate
4) Step 4: Before the deadline of repayment, users can borrow and repay at any time
4. Loan cycle
The maximum loan cycles of different mortgage loan plans are different. Users can borrow and repay at any time before the deadline of repayment. Users must make one-time repayment of the principal and interest accrued of the loan
Borrow what token and need repay what token. Quantity of repayment = borrowed assets + interest accrued
5. Loan-on-value rate
Loan-on-value rate refers to the ratio of the loan principal and the mortgaged cryptocurrency market value assets. The loan-on-value rate is reasonably determined and fluctuated according to the price fluctuation range, trend and other factors of the crypto Therefore, the loan-on-value rates corresponding to different loan currencies may be different. The index price of the corresponding currency is used to calculate the asset, which is calculated according to the unified unit of USDT.
Loan-on-value rate = Loan asset / pledged asset * 100%
6. Index price
Index price is calculated according to the latest price of multiple exchanges. The index price will affect the maximum loan amount and the order risk rate during the loan.
7. Interest bearing rules
BKEX platform supports hour interest and daily interest. It is determined by the specific mortgage loan plan and the interest bearing way chose by users when submitting mortgage application. Interest is calculated according to the actual loan time (hour(s)/day(s));
1) Daily interest: Interest shall be calculated from the day when the loan arrives at the account. And then the interest shall be calculated at 00:00 (UTC+8) of every day. If the loan is less than one day, it shall be calculated as one day.
2) Hour interest: The interest shall be calculated when the loan arrives at the account. And then the interest shall be calculated at the beginning of every hour. If the loan is less than one hour, it shall be calculated as one hour.
8. Forced liquidation due to overdue repayment
If the principal and interest is not repaid at 00:00 (UTC+8) of the deadline of repayment, it will be deemed as overdue. If it is overdue, it will trigger forced liquidation.
9. Forced liquidation due to low order risk rate
Order risk rate = Pledged assets / (borrowed assets + interest) * 100%
When users generate mortgage loan orders, the value of pledge and borrowed tokens will change with the fluctuation of market price. In order to control the platform risk, the order risk rate is used to measure the value change. The higher the order risk rate is, the smaller the order forced liquidation risk is. For loan order, users can increase the pledge to control the order risk rate to prevent forced liquidation. For two hours before the deadline for repayment, no pledge can be added to the order.
10. Order forced liquidation
BKEX will deduct corresponding pledge which is equivalent to the value of loan principal and accrued interest to repay the debt (if all the pledged assets are deducted and still cannot repay the debt, BKEX platform will not use any other assets of user’s accounts). If there is any remaining pledged assets, the remaining assets will be returned the user’s wallet account.
11. Warning of forced liquidation
1) Warning of forced liquidation due to overdue repayment: The user will be reminded that the repayment will be overdue soon and repayment should be made as soon as possible when there are 16 hours to repay
2) Warning of forced liquidation due to low order risk rate
In the above two cases, the platform will notify the borrower in the form of SMS. After receiving the SMS, the borrower can add pledge or repay beforehand to prevent the order from forced liquidation (the risk rate of warning for different mortgage loan plans is different ).
The platform is not responsible for the delay of notification caused by the third party notification obstacles and other reasons. Users need to pay attention to account positions at any time.