The Challenge, Trend and Chance in Cryptocurrency lending

6 min readOct 9, 2018


In China, many young people leave their hometown and go to giant cities such as Beijing or Shanghai for work. A large part of these young people are struggling for an apartment of their own in these cities. Due to the household registration system, social security system and public education system are all bind to people’s own house in China, if a family don’t have their own house in those giant cities, none of public resources such as medicine and education could they get. Since Chinese government bind those public resources to citizen’s house, China experienced house price boom in recent years.

Bob is a post-95s Shanghai native who had two apartments in a Lane of Huangpu District. The price of each apartment is over 500,000 USD. Thanks to their healthy bodies, his parents, who are both working in state-owned enterprise, seldom went to hospital, saved a lot of family wealth. Because of these advantages, they don’t need to worry about money for life at all, Bob’s family leaves a happy life in Shanghai. As a fresh graduate, Bob was greatly different from other colleagues who were always overworked to strive for an apartment in Shanghai. When others worked hard, Bob never worked overtime as an administrative staff, he often goes to bars and nightspots at Jing’an temple and Hengshan Road with friends. However, Bob is a humorous and honest person, who won the trust of all his friends, so that his cozy life didn’t bother anyone around him.

However, his luck ran out, Bob has been in trouble recently.

During World Cup 2018, his friends bet on football games, Bob also never missing any match as a football fan. However, due to problems such as the consecutive shock defeat of strong teams and dealers abscond with bet, Bob was confronted with heavy losses, not only losing all the money he had accumulated for a long time, but also being scolded by his father. With a seething rage, his father suffered cerebral hemorrhage. The expenses for outpatient service, hospitalization, surgery and rehabilitation might amount to over 50,000 USD. His family was suddenly short of cash, such plight making the situation worse.

Misfortunes never come singly. The import & export merchant company which Bob served suffered a heavy lose because of China-US trade war, which leading to company’s great difficult financial situation. Facing this dilemma, the company had to downsize its workforce, including Bob. Thus, Bob had to look for a new job, however, the domestic economy is not very well at this moment, he failed to find a satisfied job after two months on job hunting.

Finally, Bob realized that he should become enterprising. As heaven maintains vigor through movement, a gentleman should constantly strive for self-perfection. To change the situation, Bob decided to start up fast-food business with two bosom friends.

Business startup required initial capital. His two partners decided to invest 100,000 USD each one, whereas Bob was full of anxiety because he couldn’t afford the investment as a result of the frequent troubles. Considering the payment for his father’s hospitalization and business startup at a critical stage, Bob had to mortgage one apartment to obtain fund. Over 100,000 USD remains after he made payment for hospitalization and initial capital. He had no idea about how to make use of the rest money. He couldn’t take high-risk investments such as stock, online P2P products, even the risk of bank financial products is not acceptable to him. However, if he put these money to bank fixed term deposits, the earning interest could not even cover the loss due to currency inflation. Thus, the money was left idle. Despite temporary liquidity, his apartment was mortgaged, the money left couldn’t cover the collateral of his apartment, if his business failed, Bob will lose the apartment in core area of Shanghai forever, which makes him under a high stress.

The case above showed us existing problem of current financial system. Assets like housing, automobile, antique and scripts and paintings tend to be liquidated could only through ways of mortgaging or selling. Existing system rejects offer service to assets owner’s wishes of transferring only part of their assets’ ownership. Bob was not allowed to mortgage 30% of the real estate’s ownership to obtain fund, a Mercedes S400L owner cannot mortgage 49% of his car’s ownership. Likewise, a famous painting could be only under the full ownership of its holder, its ownership cannot be shared by more fans or investors.

In the presence of blockchain technologies, new opportunities will be offered to those who are reluctant to give up total asset ownership and have a need for funds. For example, the IHT program developed by in the early 2018, IHT integrates global real estate markets with the blockchain mechanism. Through joining blockchain and real estate, the real estate developer, financial institutions and their users can be connected and the transaction of real estate can be made a part of “digital credit society”, therefore constituting a pivotal supporting part of the economic development. All owners and investors will become beneficiaries of real estate blockchain.1

Though Bob could not mortgage or sell his apartment to get benefits by splitting its ownership through IHT program yet, it’s likely that he will be offered similar opportunities in the future. With help of these amazing tools, users may transfer only a part of their assets’ ownership for the sake of financial liquidity. Economy development will be facilitated greatly in the presence of more capital flows.

Tools such as IHT can make assets tokenized. The tokenized assets will probably be traded at certain exchange to create a new eye-popping trading system. It is imaginable that a Korean investor may incorporate part of a certain apartment’s ownership in London or New York into his investment portfolio, or it is highly likely that human beings may take ownership of the tokenized assets in a high-tech city on the Mars at space travel era. This is a great attraction to investors all around the world, which may subvert existing financial system to re-shape economic and even the global political systems. Such remarkable change will undoubtedly require governments all over the world to make great adjustments over policies and regulations, and this process will be surely full of twists and turns.

If users are not willing to sell their asset tokens, they may obtain funds by way of mortgaging or pledging. In the field of cryptocurrency lending, some projects already allowed users to get cash funds or other tokens by mortgaging their tokens. Currently, dozens of projects including EthLend, SALT, Wetrust, Lendingblock, Lendroid, DCC, Libra Credit, Celsius, Lendoit, Everex, Market Protocol, and Hyperlending have entered the business of token mortgaging or lending, which has implied development potential of these services.

However, current cryptocurrency lending/mortgaging projects have many drawbacks due to limitations at present stage.

For example, large numbers of projects have never built corresponding platform systems before. Due to the lack of development ability, there are many defects in terms of progress, function and risk control system. Lots of projects select closed source rather than open source. Consequently, technical problems will be probably unable to be detected timely so that users may face the risk of asset losing when using these platforms.

If there is a underlying platform which could introduce modular designs for relevant technologies that build lending-related DAPPs, reduce development difficulties of DAPPs, highlight safety by open source, promote self-upgrade through technical community, the lending-related DAPPs will be undoubtedly built and popularized more widely.

For another instance, current lending projects tend to start business in one country or region in limits of factors such as team and governmental resource. They are lacking the ability to satisfy users in respect of both quantity and amount in lending transactions. Under this circumstance, a bitcoiner who hope to mortgage 10000 BTC may found itself be in the plight that there are no lenders.

Considering global unification of cryptocurrency, its lending platform should be equipped with a globally unified order book system. Since such projects are independent from each other, users are eager for a more advanced system which is furnished with more trading depth and selections. This will post a challenge to developers of cryptocurrency lending system.

None can escape from risk control system design problems under situation of collateral’s market price fluctuates regardless of equity pledging and cryptocurrency lending/pledging. Obviously, not all projects are competent enough in such highly specialized field that requires strong professional capacity. If a program could solve those underlying problems in the form of protocol layer, runner of DAPPS only need to focus on improving user satisfaction and market shares, the specialization in crypto-lending will no doubt be greatly promoted, which is good for development of industry.

Drawbacks of existing system are also opportunities for those who can break the plight. The Force Protocol team will release a product soon — the Force Protocol, it’s a global cryptocurrency lending/pledging platform built as protocol layer. By the forms of modular design, cross-platform support, open source code development and community-based operation, The Force Protocol will bring strong power to existing cryptocurrency lending system, greatly promote the development of cryptocurrency lending industry.




ForTube is the world’s top DeFi lending platform launched by The Force Protocol.