ForTube Project Review: Leading De-Fi Lending & Bond Platform

The ForTube platform is an open financial service protocol committed to introducing inclusive, innovative, secure, and programmable features to modern-day finance.

By
Goon Trades
on
December 31, 2019
Category:
Project Insight

What is the Force Protocol & ForTube

The ForTube platform is developed by The Force Protocol, an open financial service protocol committed to introducing inclusive, innovative, secure, and programmable features to modern-day finance. ForTube is an open financial platform built on blockchain technology to innovate the financial sector; the team aims to "[practice] inclusive finance and [provide] appropriate and effective financial services to all users of the world." The ForTube platform consists of two primary services, ForTube Bond and ForTube Bank. ForTube offers its services on both the Ethereum Network and the Binance Smart Chain (BSC).

Key Features

  • ForTube Bank
  • ForTube Bond
  • DeFi Technical Components
  • APEC
  • BEAMS
  • GEL CALM MAK
  • Security Audits


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Technical Components

The Force Protocol has split its focus into three decentralized finance (De-Fi) technical components: Fundamental component, extended component, and financial component, which in unison have been coined "The Force." These components aim to offer solutions to challenges that ETH based DApp users and developers face. By implementing these components the team strives to improve contract upgrades, fixed data structure, slow on-chain interaction, poor UI, lack of necessary infrastructure and security issues.

I will do a quick rundown of each technical component and what technologies they comprise, but check out the ForTube Docs for a full reporting.

Fundamental Component

The fundamental component consists of Assets Protected Elastic Contracts (APEC), a platform in Solidity, which is an essential component of the ForTube protocol. APEC allows the ForTube protocol to ensure decentralization and asset ownership while simultaneously allowing for adjustment and improvement when developing contracts.

The design concept is broken up into three pieces and can be outlined in the graphic below

  • Asset protected
  • Logic upgradable
  • Data extensible


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Extended Component

The extended component leverages the Blockchain Enquiring, Auditing, and Messaging System (BEAMS), to better synchronize the on-chain and off-chain world. This off-chain system incorporates three unique characteristics allowing it to communicate with on-chain contracts through 3 modules.

The following flow chart outline how these characteristics interact and communicate:


Financial Component

The team at ForTube outlines three fundamental principles that are crucial for De-Fi security. The principles are listed as follow:

1.Protect the platform from attack and invasion

2.Protect the assets once the platform is invaded

3.Minimize the loss when the assets are no longer secure

To mitigate on and off-chain risk, the team has integrated the following measures

  • Global Emergency Lockdown (GEL)
  • Cooperative Automatic Lockdown Mechanism (CALM)
  • Multisig Admin Keys(MAK)

Each of these systems aims to secure a part of the protocol's decentralized and financial integrity. To keep this article brief, users can find more information on the Financial Component on the ForTube Docs.


ForTube Bond

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The team at ForTube aims to leverage The Force Protocol to apply blockchain technologies into the traditional financial market: bond markets. Typically, bond issuance calls for many institutional hoops, requiring regulatory agencies, underwriter auditors, lawyers, ratings, custody, registration, and settlement. The team at ForTube aims to innovate on this process through incorporating The Force Protocol. Currently, ForTube Bond is only available on the Ethereum Network, but it will receive integration on the BSC in the future.

These bonds have been coined "crypto bonds," which are equipped with the complete set of solutions to emulate traditional bond markets, involving a credit rating, bond issuance, bond liquidation, and bond trading. The ForTube platform simplifies the Bond issuance process, using a registration system instead of a centralized agency that reviews and approves. Once the ForTube platform verifies the bond's necessary information, the bond will undergo a community vote to evaluate the credit rating.

A Bond credit rating is a rating that is derived from the value of bonds issued by economic entities. These ratings evaluate the default risk providing a reference for investors. The following Bond credit rating table is the one implemented by ForTube:

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Community and Professional Rating

The ForTube rating is not solely dependent on the community vote; the final rating is decided by both a community rating and a professional rating. The ratings are weighted, weighing the community vote at 40% and the professional vote at 60%. This system allows both FOR (governance token) holders and experienced credit rating individuals or institutions to compromise on the final credit rating. For someone to qualify as a professional credit rater, they must provide materials to prove one's qualifications to the ForTube team.

Participants
This system contains the same participants as traditional bond markets, just presented in a more conventional manner. The following from excerpt ForTube outlines the 4 participants that can be seen in crypto bond markets:

Issuer

It can be an individual, a project party, or even a real entity. The issuer needs to have certain repayment ability and pledge the crypto assets it holds as repayment guarantee. Due to the large volatility of the value of crypto assets, issuers need to over-collateralize the cryptocurrency and face the risk of liquidation at the same time.

Investors

The ForTube platform provides investors with bond products with considerable returns and relatively controllable risks. Investors who hold USDT, DAI, USDC and other stable coins can easily participate in bond investment. Bond products will be secured by over-collateralized crypto assets, and liquidators will promptly liquidate non-performing assets to protect investors' rights and interests.

Rater

It can be an individual or a professional rating agency holding FOR, the Force Protocol ecological token. Participating in bond credit ratings can obtain rating service fees.

Liquidator

an individual or program that handles bad debts in the system. The ForTube platform provides a liquidation interface where everyone can participate in liquidation and obtain liquidation service fees.


Underlying Risk

There are a few key risks to understand for participants in this market. 

The largest risks are credit risks, where the debtor is unable to meet its repayment obligations. The following are all potential reasons why a debtor may default: unable to repay, huge fluctuations in the price of cryptocurrency, debtor's willingness to repay decreases when the value of the pledged cryptocurrency drops sharply. To combat this, the ForTube team has introduced over-collateralization, triggering a liquidation of the debtor's assets if they are at a high risk of defaulting.

Another risk worth mentioning is liquidity risks, which occur when there is not enough depth in the markets. Lack of liquidity results in vast spreads, causing large fluctuations in price. This can be an issue for liquidators when trying to dispose of capital. To negate this risk, ForTube has set variable liquidation service fees respective to each asset. 

As goes for all De-Fi platforms, ForTube is susceptible to smart contract risks. To reduce system failures and hacker attacks, the ForTube team has undergone several audits and continues to push for more professional audits.

Finally, the ForTube platform will run into regulation issues as they continue to innovate their decentralized bond issuance and investment platform. As for this risk, users should follow "relevant national laws" (ForTube), and in the future, the platform may also require Know Your Customer (KYC) and anti-money laundering procedures (AML).


ForTube Bank

ForTube has coined themselves a "crypto digital currency deposit and loan protocol." This model follows the concepts. They achieve this process through deploying smart contracts on the blockchain system, allowing users to deposit, withdraw, borrow, and pay. Like most lending and borrowing protocols, users earn interest through depositing crypto into their platforms. 

ForTube also incorporates over-collateralized lending with a collateral rate of 150%. If a borrower's loan exceeds the collateral rate, the smart contract seizes the user's assets, beginning the liquidation process. At this point, arbitrageurs will call the liquidation contract to replace the confiscated assets at a discounted price. This discount is a variable rate to each respective asset. 

Below is a table from the ForTube docs outlining ForTube Bank information:

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Interest Rates

Following suit of most lending and borrowing protocols, ForTube has adopted a variable interest rate model. This model is algorithm-driven and adjusts interest rates based on supply and demand. For users who wish to learn more about the Interest rate module and calculation, refer to the ForTube Docs.


Tokenomics

The FOR token is the native utility token for both the ForTube and The Force Protocol. This token incorporates a deflationary measure, burning 20% of its service fees in FOR monthly. Users who own FOR can participate in the ForTube platform governance voting system allowing the community to propose and vote for changes to the ForTube Bank and Bond services. Users can either purchase the token through multiple exchanges such as UniSwap, Binance, and PancakeSwap or earn it for participating in lending services and governance staking. 

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Concluding Thoughts

The ForTube team identified a weakness in traditional finance and applied blockchain technology to create a solution. ForTube offers users a permissionless and decentralized bond market on top of a lending service. To achieve this, ForTube leverages The Force Protocols three De-Fi technical components, improving some Ethereum Networks weaknesses. 

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As time progresses, the ForTube team aims to continue innovating in the space of online lending, cross-border trading, and supply chain finance, among other financial technology. With a market cap of 6 million, ForTube has a lot of potential growth in  current market conditions. I am keeping an eye on both The Force Protocol and ForTube as the De-Fi space continues to expand rapidly.

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Goon Trades

Greg (GoonTrades) is BSC News' Chief Editor and is also a writer for the team. Currently enrolled as an economics major, he finds himself as a cryptocurrency researcher, writer, and technical trader.