Hashstack & Under-Collateralised Lending in DeFi - TOKEN2049 Singapore 2022

good afternoon I am vinay founder and CEO of hashtag a brief about us we provide on-chain under collateralized loans up to 300 percent your collateral we are currently live on BNB chain and we'll be releasing a stock net version in the next couple of days in today's topic hashtag an undercollectual as lending in D5 I'll briefly touch upon the current state of D5 its body lenex and wavy fit so let's dive in uh today if we take a look at the D5 ecosystem in general the uh the entire products that are built in this space can be basketed into two baskets one that serve the original another that serves the institutions for the institutions you would see Solutions such as Maple Finance two five gold fins and for the V12 you have Pioneers such as compound away make a dog uh the main differentiator between these two baskets apart the fact that they serve totally two different user segments being uh the fact that the institutional Focus the ones that Focus the SMS they offer under collateralized loans while the ones that serve the retail they are largely over collateralized and this is probably due to the fact that um uh the on-chan activity of the retail users is largely restricted uh the inability to profile the borrower the debt recovery risk Etc now as a solution to this as in response to this there are new set of solutions that are being developed and they can further be classified into two baskets one that uses your online reputation by marrying your uh online activity with your wallet to determine a credit worthiness of your particular wallet and two that tries to mimic credit scores on the blockchain by using a FICO model now coming to these two solutions again uh considering less than 1.5 percent of today's population is still uh you know have used D5 the on-chan activity is largely restricted and any form of credit score that is thus derived is unreliable so uh this makes both of these approaches impractical and that's there is a thus There's an opportunity the opportunity being overcollectual as lending restricts the mass adoption while under collateralized lending through credit score is Not Practical today and before we dive into the solution let's take a look at how the thread file entities such as Banks approach to this problem and for this let me give you a quick example of as to how the lending works for the informal sector so let's say there's an individual called John and he has inconsistent employment and inconsistent finances uh but he wants to purchase it took took to generate livelihood so he says up about two thousand dollars and the cost of the took took in India it's called as Auto is about five thousand dollar so goes to the dealer and the dealer facilitates uh a conversation with a banker who agrees to finance the remaining three thousand dollar so that John can purchase the tuk-tuk now in this transaction the bank pays three thousand dollar to the dealer and John adds two thousand dollar from his end John walks away with the tuk-tuk and dealer gets five thousand dollars worth of the five thousand dollars that is the cost of the trip took in his pocket now in this total transaction If You observe this is under collectible as loan wherein it met a specific objective because John met the requirement he needed with regards to the loan and he ends up paying the monthly installments to the banks now this got us thinking because this is a similar approach or entities such as Banks they Inc adopt when the when it comes to giving out loans for home for Education Etc so we wanted to see if we can mimic this solution to enable undercover as lending in deep fat and as it turns out it is possible so the solution being hashtag as we established uh we enable our users to borrow up to 300 percent the collateral as loans and at this moment we are the only product in the entire ecosystem that's enabling this and our loans are designed to encourage productive lending wherein our users our borrowers can utilize the loans they get for personal finance and trading Capital needs and these are the two of the most requirement required use cases our borrowers said to have when it comes to approaching under default lending providers now uh there are four users who are a part of the entire chain the liquidity provider who are depositors the borrowers the Liquidators and the protocol itself among these four users the borrowers are the ones I'm going to give you a quick walk through about how it works as because these are the ones who generate value for the rest of the three users now giving a simple example uh let's say uh there's another user called winner who is me and this user comes to open uh open is the name of the protocol and this user can borrow up to 300 with a collateral as little as 100 now he has an option to spend this loan into two ways one he can withdraw a portion of the loan into his personal wallet while keeping the remaining loan as a trading capital or he can utilize the entire rate of 300 loan as a trading capital so the maximum permits will withdrawal into a personal wallet does not Exit 70 percent your collateral that is 70 dollars so the remnant balance that stays within the protocol is owned by the protocol with you the borrower has the right to spend to enable effective loan spend we integrate applications across different l1s and l2s the uh recruited the applications we created the functionalities within those applications and if as a matter of fact let's say vinay ends up investing on a coin taking a long position on D by DX and if the trade goes north the profits of a hiss to keep and if the trade goes south considering the protocol controls the owns the funds the protocol has an option to liquidate those that position in order to recover itself however for the sake of transparency it delegates this task for the third stakeholder known as Liquidators uh so this uh definitely begs the question what are the risks the primary risk as to why no uh really any other product tries under collectible as loans for the crypto retail being the debt recovery risk but the fact that the protocol does not seat more than 70 percent of the borrowers collateral into the borrowers wallet gives the protocol The Authority uh to secure itself in the event alone goes south and hence uh we are dead uh we can mitigate debt recovery risk kyc is not mandated as of now but uh till the dead position is about hundred thousand dollars in general we have we factored in various risthesis primarily with regards to securing the liquid liquidity providers securing the protocol and of course the overall uh uh process in itself I'll uh simply list on a few of them so there is a function called permissible CDR when a user tries to borrow a loan uh this is a function that determines what is the borrowing capacity the user has and this is based on the various parameters such as the borrower's relationship with the protocol the computational feeds such as implied and realized volatility of the collateral the borrow or the loan and the available asset resource so permissible CDR determines how much a user can borrow from the protocol at any given point in time uh price feeds uh if you are familiar with the recent Arbitrage hack on GMX we are uh we are a proof we are full proof of that particular hack we have a dual price feed mechanism made in uh we use general price Oracle such as empiric to fetch the general purpose price for an asset we also use a fair price mechanism that relies on product constant formula to determine what is the executable trade value for any particular asset from asset a into asset B in the case of Liquidation in the case of borrowing alone um about this uh there are a few other uh this is we have at this moment but for the sake of time I'll restrict myself um now this brings the question can this scale show uh the under so today there is an over collateralization problem under collateralization loan under collateral has loans through credit score is Not Practical today and you are a middleware solution so what if tomorrow crypto goes mainstream can you guys still survive uh the answer is yes uh we the enter product is designed as a modular in the sense today we are able to offer up to three times a collateral as loan but as the mass adoption grows we are in a position to build our own credit with coracle wherein we we will be able to give out loans in excess of three times a collateral and in some occasions we will also be able to give out loans without any collateral backed by real world assets and closing in uh at this moment we are live on BNB chain and we're launching on stock net this weekend we have acquired over 356 million dollars in test net liquidity uh spanning 40 000 plus online transactions but the single most validator for us is the asset utilization for us the asset utilization is 63 percent that is for every 100 deposits we have we are able to deploy 63 dollars as loans this when we compare with the incumbent players such as make a dove compound or away they do not exceed 40 dollars so we have at least 57.5 percent higher asset utilization without diversifying the asset utilization in comparison to our current uh competitors so with that being said uh thank you for your time