Blockchain Loan Management System for Digital Assets

Blockchain Loan Management System for Digital Assets

Test Questions

What are the advantages of digital asset mortgages over traditional loans?

What is the role of blockchain oracles in digital asset mortgages?

Explain the concept of multi-signature wallets and their use in collateral management.

How does the loan management system determine when a margin call is triggered?

Describe the steps taken by the loan management system to determine the size of a liquidation order.

List the components in the oracle contract code used to manage collateral wallet transactions.

Explain the importance of external data in the blockchain oracle system and where it comes from.

Why is liquidity an important factor in determining the loan-to-value ratio (LTV) of digital asset mortgages?

Describe the actions that an oracle can take when liquidation conditions are met.

Explain how an oracle determines when its internal state representation is invalid.

Test Question Answers

Digital asset mortgages do not require a credit rating system, protecting the privacy of borrowers. The characteristics of the blockchain also make lending safer, more convenient, and improve lender profitability.

Blockchain oracles act as automated loan management software that receives, integrates, and processes off-chain information such as digital asset prices and loan status to manage loans.

Multi-signature wallets require multiple private keys to authorize transactions, which enhances the security of collateral management. In this system, borrowers, lenders, and oracles can all have private keys.

The loan management system continuously monitors collateral value and loan status. When the loan-to-value ratio (LTV) exceeds a pre-set threshold, the system triggers a margin call.

The system first determines how much collateral needs to be sold to bring the LTV back to an acceptable level. This may require considering factors such as collateral price, liquidity, and market depth.

These components include modules for determining LTV, modules for determining margin call and liquidation triggers, modules for issuing warnings, and modules for signing and broadcasting transactions.

External data provides information that oracles cannot directly obtain from the blockchain, such as digital asset prices, market depth, and liquidity of clearing venues. This information is critical for oracles to make intelligent decisions.

Liquidity refers to how quickly and at how cheaply an asset can be bought and sold. Highly liquid collateral can be sold faster when liquidation is required, thereby reducing the risk for lenders.

Oracles can determine stop prices, select clearing venues, request signatures on trades, broadcast trades to the blockchain network to transfer funds, and place sell orders at those venues.

If an oracle does not receive a state update transaction within a set period of time, or if the state update contains invalid data, the oracle considers its internal state representation to be invalid.

Glossary of Key Terms

Term Definitions Blockchain A decentralized, distributed ledger that records the history of all transactions. Blockchain Oracle A software that connects a blockchain to external data sources, providing off-chain information to smart contracts. Smart Contracts Self-executing contracts stored on the blockchain, with their terms written directly into the code. Digital Assets Assets represented in digital form that can be securely traded using cryptography. Collateral Assets that a borrower provides to a lender to ensure repayment of a loan. Loan-to-Value Ratio (LTV) The ratio of the loan amount to the value of the collateral. Margin Call A notice requiring a borrower to add collateral or repay part of a loan when the LTV falls below a certain threshold. Liquidation The act of selling collateral to repay a loan, usually when a borrower defaults. Multi-signature wallets Wallets that require more than one private key to authorize a transaction, providing enhanced security. External data Information that is not accessible to the blockchain itself, such as digital asset prices or market depth. Liquidity The degree to which an asset can be bought and sold quickly and at low cost. Stop loss The price at which an asset is sold in order to limit losses. Clearing place An exchange or other platform where digital assets can be bought and sold.