Mortgage Lending of Blockchain Finance — the Revolution Brought by VENA Network
The US Trump government pushed the “tax reform” which is a conductive policy, when they were waving the banner of trade protectionism. The change it brings is that no matter what kind of data changes the “tax reform” has brought to the US economy, it will inevitably form an economic wave that is transmitted around the world. For example, for China on the other side of the Pacific Ocean, this has created a pressure to “reduction of taxes” and to strengthen domestic demand.
On the other hand, this shows that the current economic situation of Chinese companies is not optimistic. As early as the end of last year, China’s economics circles have predicted that China’s economy is in the L-shaped stage. One of the signs is that the financing cost of the real economy is rising rapidly. This is also the fifth national financial work conference to reduce the financing cost of the real economy. An important reason mentioned again.
Such signs have occurred frequently, and new financial signals have been passed to the outside world. That is, in the new economic period, all private companies are worried about two things. First, as the trade war continues to escalate, companies are worried that overcapacity will continue. The second is how to solve the situation of tight funds in the hands of China’s economic slowdown.
From the financial crisis in 2008, China began to enter the economic track of sharp expansion of credit. From the local government financing platform for infrastructure investment, to the long-term high leverage of enterprises, and to household credit in the consumer sector, financing has become a difficult choice for anyone at the current stage.
Through tax cuts to stimulate domestic demand, the policy of reducing burdens for enterprises has been implemented, and the other approach on how to extend the credit industry has also become popular in society. After shadow finance, a new choice emerged in front of people — it is blockchain finance.
Blockchain finance has been accepted and even welcomed by the market, and there are objective conditions that cannot be separated.
Since the first half of this year, P2P thunderstorms have been more frequent, but corporate debt defaults are also rare. The financial default event represented by this makes people see the limitations of traditional financing methods. Investing companies are essentially a process of financing participation, and financing requires collateral. In the past, the most common such collateral was Real estate is represented by fixed assets, or corporate equity — for example, LeTV has mortgaged LeTV Building for financing, and Changsheng Life Science has sought securities from Industrial Securities through pledge of equity.
The financing of real estate for collateral has been the norm in the past, because the market price is very high, although the debt scale is increasing, the debt risk has not been exposed. Now that house prices that have grown for many years have finally lost their upward momentum, bank-based financial institutions must become more cautious when assessing asset risks, and pricing is more conservative, which weakens the size of the real estate financing market. Equity pledge financing looks good, but equity itself is a central asset, subject to the need to contain, may not be able to get the desired margin of financing security.
For example, Industrial Securities once held 178 million shares of Changsheng Life Science. After the crisis of trust, the stock price of Changsheng continued to fall, which also brought huge risks to Industrial Securities. However, Industrial Securities is unable to deal with it. First, due to the market’s ups and downs, and second, there is a dispute over the right to dispose of the equity itself. The Shenzhen Stock Exchange has imposed restrictions on the shares held by Changsheng Life Science’s major shareholder and Dong Jiangao. This means that Industrial Securities is not free to sell longevity stocks.
In this context, a new solution is also attracting market attention with the emergence of the decentralization technology of blockchain. It will rely on smart contracts to achieve forced liquidation, or transfer through wallet multi-party private key signature. Asset disposal rights. The key question for companies is how to make corporate assets and digital currencies form a credit relationship, and to have a market environment that can be freely and fully traded.
The first solution is the STO that was sizzled some time ago, that is, the securitization token issuance. Through the STO, the difficulty of financing is greatly reduced, and the fund side has a certain psychological security. However, STO also has a lot of problems, the first of which is the issue of “material real right confirmation”. Although the securities-type TOKEN has certain dividend rights, the pure securities-type TOKEN only maps the equity and bonds, and cannot replace the value of real world.
All in all, since debt financing has become the mainstream channel for corporate financing, the difficulty of corporate financing has gradually increased, seeking potential possible solutions, giving new opportunities to the blockchain finance market. Of course, there are still many problems to be solved.
Digital Asset Mortgage
STO solves the tradability of claims, and if STO’s innovative ideas are to inspire us to find a universally applicable phased solution in the financial market, we need to focus on another point –
The token issued through STO is liquid, which is why the capital inflow must be carried out in a market with sufficient trading depth, otherwise the financing security will not be discussed. Therefore, under the current market conditions, digital asset mortgage financing has become a solution that is easier to understand and more acceptable to the market.
Digital currency mortgage financing, the most suitable business scenario in the mine: When the bitcoin dug out by miners accumulates in the wallet, the cash gap that needs to be expanded is larger, and the token that actually appears in the wallet is The cornerstone of a loan transaction. In particular, when the wallet holds a stable currency and the currency value is relatively stable, the transaction depth of the secondary market does not need to be worried. As long as the two parties have completed the pledge rules, a certain pledge rate and market interest can be exchanged. The cash required by the business party. Asia’s VENA NETWORK team is currently the leader in this area, they launched the first mortgage lending products for miners and got the cash they needed.
Similarly, when the business scenario is enriched, the financing pledge can occur on any business entity that holds the token. For the financing platform that provides financing, how to provide “winding” assistance for enterprises with financing needs is very important. One of the main problems to be solved by “winding up” is how to make property rights online. In the past, companies issued tokens to complete the ICO process. Tokens became an integral part of their declarations and had a certain value. Therefore, companies would try to pledge these tokens in exchange for funds.
But the problem is that this is usually not feasible because the spontaneous token lacks market participation threshold, which leads to more value itself from the project party’s own propaganda pricing, and the transaction lacks sufficient market bargaining links. Some projects are only available on a few exchanges, and price fluctuations can be described by roller coasters. There is no institution in the market that dares to take risks.
Therefore, how to connect stable coins becomes a potential method strategy. Among the two paths currently seen, one is based on the bitcoin multi-party signature wallet, with a certain pledge rate and equals and repayment conditions as a constraint to provide financing; second, between the issued token and the stable currency Establish a connection relationship and provide loan services if this exchange rate remains fixed.
For example, token issuance usually has an ICO action, before the ICO is a private placement phase, while at ICO, the ratio of redemption is certain. In the form of how many tokens are exchanged in 1ETH, the token pricing process has been completed. It is theoretically feasible to provide financing for the project side before the ICO — although the token value is fixed, the ICO has no market participation before, and the token in the hand is sold and the repurchase clause is required.
Consider a case where the date of the ICO is agreed to be the repayment date, and the repurchase clause is signed at the same time, that is, a few days before the ICO, if the pledge rate of the target ETH and other currencies falls to the red line, the funder has the right to ask the lender to The market price repurchases the corresponding number of tokens, that is, through this step, the closing operation of the market circulation is completed.
But the problem is coming again. The borrower has no money. How can we ensure that there is money to buy back? This problem can be understood in this way — through the project party’s own token mortgage financing, it has been a huge improvement, because it can provide a certain PR space for its propaganda value; secondly, in practice, you can seek the same middleman in private lending. The guarantor role appears. The guarantor only needs to put a certain amount of stable currency in the wallet, and can realize mortgage financing through contract or multi-signing technology.
What is the significance of doing this? The significance is that in the past, only B could find C to borrow money. Now A can establish a relationship with B, and can also borrow C to borrow money. More importantly, at least on the surface, it uses its own assets to finance. As mentioned earlier, token Assets are often described as an important part of the product ecology, and a portion of the ecological value is transferred to a certain amount of funds, which achieves the effect of no-cost (low interest) repurchase support.
The Road to the Future
Blockchain finance attempts to change the rules of the world order, making corporate financial scenarios more transparent and diversified, but also notices the huge differences between reality and ideals. In any case, this financial experiment will continue. It may not meet the absolute standards of past financial standards, but regardless of the success of its radicalism, we must admit that such financial attempts are bringing new changes to the world.
What kind of era will the VENA NETWORK and other financial revolution participants create? This makes us look forward to it.
As a component of blockchain finance, the long-term issue of corporate lending will go along with the blockchain and it is worthy of our optimistic expectation.