Understanding ForTube 2.0 — an FAQ on the more complex terms of lending and borrowing

ForTube is a liquidity pool based lending platform, which enables anyone to deposit crypto-assets to earn interests or borrow with collateral. Since the launch of ForTube 2.0, it has attracted countless crypto-asset enthusiasts around the world. The market size has already exceeded $125 million in just a few weeks. In response to the issues raised by the community, this article will answer frequently asked questions in detail.

What do some of the key terms on the ForTube platform mean?

Deposit tokens:

Users transfer the crypto-assets supported by the platform to the smart contract through the Bank’s deposit function to obtain deposit interests.

When users deposit their tokens, the deposited asset will first repay the loan (if any) of that asset, and the net assets will begin accruing interest;

Example: A user borrowed 2000 $FOR on ForTube. If the user deposits 10000 $FOR again, 2000 $FOR will be used to repay the loan, the remaining 8000 $FOR will be included in the net assets and the user starts to accrue interest. If the user had deposited another asset, such as 1000 BNB, 2000 FOR loan would remain outstanding, while the 1000 BNB would accrue interest.

Withdraw tokens:

The user’s withdrawable amount of a certain token includes the deposited amount of the token and the borrowable amount by depositing other crypto-assets as collateral. If debts are generated after withdrawal, borrowing interests will be generated. (Please refer to the following content in How to calculate the Withdrawable Amount for the detailed algorithm.)

Example: If a user has 1,000 USDC deposited on the platform, the user can withdraw up to 1,000 USDC or a smaller amount of a different asset as a borrowing.

Maximum LTV (loan-to-value ratio):

The maximum Loan-to-Value ratio represents the maximum borrowing capacity of particular collateral. For example, if the maximum LTV of a token is 75%, it means a deposit worth $100 allows the user to borrow at most $75 using it as collateral.

Example: If a user deposited ETH worth $10,000, and the maximum loan-to-deposit ratio of ETH is 85%, then the user can borrow other tokens with a maximum value of $8,500 (10000*0.85)

Maximum secure borrowable amount:

Assuming that the deposit value of the user’s asset i is Vi, then Vi=the quantity of i * the price of i. Assuming that the maximum LTV of the asset is Fi, the user’s maximum borrowing capacity is ∑(Vi×Fi). If the user borrows according to the maximum borrowing capacity, he would face the risk of being liquidated. Therefore, the system of the ForTube platform would multiply the user’s maximum borrowing capacity by a coefficient MAX of less than 1 (currently is 0.8), that is, the maximum secure borrowable amount of the user = ∑(Vi×Fi ) × MAX.

Example: A user deposited ETH worth $10,000 and BNB worth $10,000. The maximum LTV of ETH and BNB is 0.85 and 0.75 respectively. Then the maximum borrowing capacity of the user is 10000*0.85+10000*0.75=$16000.

However, if the user borrows other assets worth $16,000, his assets would be in danger of being liquidated due to price fluctuations. Here is where the coefficient MAX comes in. The user’s maximum secure borrowable amount should be 16,000*0.8=$12,800. This can effectively set up a buffer zone and reduce the risk of liquidation of the user’s assets.

How to calculate the Withdrawable Amount?

The user’s withdrawable amount of a certain token includes the maximum redeemable amount and the maximum secure borrowable amount.

The calculation process of the user’s withdrawable amount Zi for any asset i is:

1. A user deposits a certain asset, and the redeemable amount of the deposited asset is affected by the user’s debt. Assuming Debt as the user’s total debt value and the asset price of asset i as Pi, then:

Therefore, the user’s maximum redeemable amount Xi is

Xi = min {Xi’, i account balance}

2. On the premise that the i asset deposit is exhausted, the user’s maximum borrowable amount Yi is

3. Finally, the user can withdraw

For example: the user’s assets allocation on ForTube is as follows:

For this user, Debt is the value of HT, that is, 50*5=$250. If the user wants to withdraw USDT, we need to calculate the maximum secure borrowable value first:

The value that users can borrow with pledged USDT and ETH as collateral is 100*0.95+3500*0.85=$3070. The maximum secure borrowable value is 3070*0.8=$2456

Therefore the value of USDT we can borrow after considering the debt is (2456–250)/1=2206

So the user can borrow at most 2206 USDT.

What is health index:

Different from general lending platforms, ForTube support pledging various assets as collateral to borrow other assets, so a simple pledge rate and liquidation line of a single asset are no longer applicable. Therefore, ForTube introduces the concept of health index. The health index is a value used to reflect the health of the user’s debt. The higher the value, the lower the possibility of liquidation and the higher the security status of the user’s funds.

The health index H is defined as follows:

When the user borrows according to the maximum borrowing capacity, H=1; if the price fluctuation makes H<1, the user’s assets will be liquidated.

When the user can borrow according to the maximum secure borrowable amount, H = 1.25. Therefore:

  • When H>1.25, it indicates that the user debt is relatively safe;
  • When 1≤H<1.25, it indicates that the user’s debt is in an early warning state and the user should increase the pledge or repay part of the debt;
  • When H<1, the user’s assets are in a liquidated state.

For example: A user deposited ETH worth $10,000 and BNB worth $10,000. The maximum LTV of ETH and BNB is 0.85 and 0.75 respectively. Then the maximum borrowing capacity of the user is 10000*0.85+10000*0.75=$16000.

If the user borrows according to the maximum borrowing capacity at this time, that is, borrows other assets worth $16,000, then his H is 1. However, because the prices of ETH and BNB will fluctuate, the H value will be less than 1, and the user’s assets will be liquidated.

Therefore, it is recommended that users borrow according to the maximum secure borrowable amount, which is 16,000*0.8 = $12,800, and the H value will be 1.25.

How is the mining APY calculated?

In order to encourage users to provide liquidity to the platform, ForTube launched a weighted asset mining campaign. Different tokens have different mining reward indexes. The user’s weighted asset calculation formula is: ∑(Vi×Fi) +∑(Vj×Fj), where Vi is the deposit value of the asset i, and Vj is the borrowing value of asset j, Fi and Fj are the mining reward indexes of assets i and j.

For example:
A user deposited ETH worth $10,000(the deposit reward index is 0.85) and borrowed USDT worth $3000(ie, the borrowing reward index is 2), then the user’s weighted asset value is 10000*0.85+3000*2=$14500. Then the user will dynamically obtain rewards based on the proportion of $14,500 in the entire weighted assets, and deposit interests (pay borrowing interests, if any).

Assuming that the weighted value of all tokens in the system is $1 million, and the daily reward of the platform is 400,000 FOR,

Then the daily rewards user can get = 400,000 *(14500/1 million) = 5800 FOR.

ForTube official website: https://for.tube/

Governance Forum: https://forum.for.tube/

Supported wallets: imToken,MYKEY,Bitpie,DappBirds,TokenPocket,BitKeep,Math Wallet,HyperPay,AToken,MEET.ONE,Coinbase wallet,Trust wallet.

Be sure to follow us on social media for more updates and mining campaigns:

▲Telegram: https://t.me/theforceprotocol666
▲Announcement channel: https://t.me/the_force_announcement
▲Twitter: https://twitter.com/ForTubeFi

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