Use-Case — Lending
Time Lock is key to the enhanced smart contract capabilities enabled by FUSION.
The essence of finance involves the flow of value in time and space, represented in traditional finance by time-based derivatives. In the following series of articles (this being the first), we will describe different use-cases for Time Lock, including bankers acceptances, options, and other financial contracts. But the simplest use of Time Lock is riskless lending.
Imagine a scenario where the Lender lends 5000FSN to the Borrower for 90 days. Without Time Lock, such a loan could be made, at the risk that the Borrower does not repay the Lender in time or in full. With Time Lock, the Lender maintains ownership of the 5000FSN after the 90 day period ends. The consensus of the FUSION Blockchain ensures that there is no counterparty risk of Borrower default.
As an example, 5000FSN is the minimum number of tokens needed to run a FUSION Supreme Node. How much would you pay to be able to use 5000FSN for 90 days? With the ability to create risk-free loans, the time value of money will be set by market forces.
And even without 5000FSN, anyone may participate in the Proof of Stake consensus, validating transactions on the FUSION Blockchain, and receiving staking rewards. Time Lock will add liquidity and flexibility to this market, because short-term investors will be able to buy staking contracts and receive rewards, while long-term investors maintain ownership and exposure to asset volatility.
Can you think of any other lending examples where Time Lock will useful?
Let us know!