Automated Risk Mechanism
The risk of mortgage loan mainly includes credit risk and collateral risk. For high volatility of cryptocurrency, it’s especially important to control risk in crypto-backed lending business.
If borrower defaulted, the collateral will be disposed to cover the risk exposure.
If the collateral devalued, the risk exposure will be covered by maintaining the collateral ratio and the forced closing rate.
Collateral Risk Management
Adopting “Margin Call” risk management executed by smart contracts,
collateral ratio = collateral value / loan amount, and set the position closing line and warning line to ensure that the collateral is sufficient.
Marketwide Risk Control
When the marketwide risk breaks out, it will lead to massive defaults which causes wearing of lending contracts. To control such risk, ZOS introduces a triple marketwide risk-control mechanism.
Principal Guarantee Rate
Platform Risk Provision
Guarantee Institution Guarantee Acceptance
When borrower does not repay the loan, the operator shall buy the credit assets at the price not lower than the principal guarantee rate.
In each business, the risk reserve is accrued according to the business volume, and when the collateral value cannot cover the loan amount, the risk reserve will be used to hedge the risk exposure.
Introduce the third-party asset management company as the ultimate risk redemption party.