INLOCK TOKEN MODEL
In this chapter we will explain the INLOCK token model through a simple loan creation process. It will cover all relevant steps and logical connections. The values we use are for demonstration to show the relation between the collateral, credit and the service fees – these values may be subject to change.
- Potential borrowers have to deposit the cryptocurrency intended to be used as collateral to the (E-Wallet Manager).
- Potential borrowers have to purchase ILK tokens, which they are able to do in INLOCK’s own exchange (Token Market – TM). There are forecast indicators which help the users estimate the necessary amount of ILK tokens in correlation to the collateral.
Assuming every requirement is met during the preparation phase, the user is able to proceed to the Loan request phase.
- Size of the collateral to be used
- Preferred currency for payment (it is possible to mark GBP as preferred currency, but the best offer will contain USD)
- Margin call: the threshold value when the collateral will be liquidated by the Collateral Manager in case of the collateral’s exchange rate indeed reaches the margin call limit . However, the Borrower is able to increase the collateral amount at any time. Setting of the margin call affects the amount of the loan that can be requested.
- Repayment due date, this parameter is also freely adjustable by the Borrower
- Forecast of ILK requirement: the platform is able to forecast the amount of ILK tokens required to complete the contract with the preset parameters; the ILK cost calculation is based upon the 0.1 % of the collateral’s value in ILK tokens.
- When the borrower confirms the settings, and the forecast, the proposal is transferred to the Offer Management Phase.
The best offer does not necessarily mean the cheapest, however. It is entirely up to the Borrower’s own preferences. In the above example, the (#2) offer is significantly more expensive than the selected (#3) offer. But the (#2) offer promises near-instant payment, which is possibly an important factor for Borrowers looking for faster payouts. When the Borrower agrees to the offer terms, the result of the Matchmaking phase is transferred back to the Offer Management Phase once more to prepare for the conditions to be recorded in a smart contract.
- The collateral for the contract in preparation is sent to the Collateral Manager.
- The Payment Provider verifies the Lender’s payout to the Borrower.
- The Payment Provider verifies that the Borrower indeed received the requested credit.
- The total platform usage cost (in the above example of 39.5 ILK) is divided among the INLOCK platform, the Collateral Manager, and the Matching Service, 60%, 30%, and 10%, respectively.
As it was mentioned before, the Collateral Manager and the Matching Service Provider can be anyone who is eligible based on the technical and legal requirements. These connections can be established through an API as well.
- At the end of the process, the smart contract is established and recorded on the Internal Blockchain.