Pooldax is a trading platform which allow users to purchase and sell Digital Tokens. Both finance and non-finance transactions are allowed in the platform. For non-finance transaction, it refers to the purchase or sell bitcoins on the platform. For example, if a user deposit $100 into the account on the platform, then that user purchases $100 worth of bitcoins on the platform. This transaction will be considered as the non-finance transaction.
For the finance transaction, the platform allows peer-to-peer finance by financing providers may be able to offer financing from and on their own account. Financing recipients may or may not accept the offer from the financing providers up to 70% of the value of a particular digital token they would like to purchase. For example, if the users would like to purchase $100 worth of bitcoin, they may use $30 from their own accounts and borrow $70 from financing providers.
In addition, Pooldax also allows short sale which is another type of financed transaction. In a short sale transaction, the users will enter into a regular spot rate of bitcoin, but the transaction is settled by delivering bitcoin that they have borrowed. The digital tokens can be borrowed for the purpose of short sales through the peer-to-peer function on the platform. However, there are no more than 70% of the bitcoins sold in the short sale can be borrowed by the borrowers.
Peer-to-Peer Financing
Third party peer-to-peer is allowed to be used in Pooldax platform in order to trade digital tokens. There are two ways that financing recipients can obtain financing which are placing bids for financing on the financing order book or waiting for the automatic matching through the Pooldax matching system. For the financing order book, it operates independent of the trading order book. . Once the desired financing is secured by a Financing Recipient, both financed and unfinanced transactions on the Trading Order Book are indistinguishable from each other to the trade matching engine.
The amount of the financing, the term of the financing, and the interest rate are all commercial terms negotiated through the Financing Order Book between Financing Providers and Financing Recipients. For instance, assume that A has $30.00 (in dollars) in her account on the Site. A obtains $70.00 in financing at X interest rate for Y term on the Financing Order Book (thereby becoming a Financing Recipient) from B, a Financing Provider. With that aggregate amount of $100.00, A may purchase $100.00 in bitcoins on the Trading Order Book from C, or from one or more other sellers. A has the right to repay the financing (including any accrued interest) at any time without pre-payment or other penalty. Obtaining financing does not create any obligation to purchase bitcoins on the Trading Order Book. A may also replace financing from B at any time with more favorable financing.
In the above example, the bitcoins purchased by A ($100.00) are subject to a Lien in favor of B up to the total amount of financing secured from B ($70.00 plus any interest component). A may remove any amount of bitcoins from the Site that is not subject to the Lien. If the Financing Recipient’s equity falls to or below 15%—calculated as the quotient (expressed as a percentage) obtained by dividing (a) the excess of (i) the market value of the purchased bitcoins over (ii) the total principal amount (plus accrued and unpaid interest) relating to all financing outstanding by (b) the market value used in (a)(i), above—Pooldax will force the liquidation of the bitcoins in A’s account without notice to A, return financing to the Financing Provider, with accrued interest, and return the balance to the Financing Recipient. Pooldax does not make margin calls. For example, if the purchased bitcoins’ value falls from $100.00 to $82.35, the difference between that value and the financing obtained by A would be $82.35 – $70.00, or $12.35. Taken as a percentage of the bitcoins’ value, $12.35 ∕ $82.35 equals 15%. In other words, if the value of the bitcoins fell to $82.35 in aggregate, A’s bitcoins would be liquidated by Pooldax on the Trading Order Book, B would be repaid, and any remaining difference ($12.35, exclusive of interest) would be A’s to retain.
As set out in the Terms of Service, you grant Pooldax agency to implement, levy, monitor, and maintain any and all Liens in favor of Financing Providers and to force-liquidate any Digital Tokens in your name or control on the Site if necessary to ensure that any Financing Provider on the Site from whom you have obtained financing is repaid in full. As set out in the Terms of Service, trading markets in digital tokens can shift quickly. Price movements can be unexpected. There is no guarantee against losses on the Site. You may lose more than is in your various wallets on the Site if you engage in financing on the Site. You are responsible for any trading and non-trading activity on your Pooldax account, but Pooldax must at all times retain the ability to protect Financing Providers by force-liquidating your account, as and when necessary. Pooldax cannot guarantee to stop losses even with the ability to force-liquidate any of your positions (due to, for example, market volatility and liquidity). Pooldax will not be and is not responsible for any Financing Provider losing funds or Digital Tokens to any Financing Recipient on Pooldax.
Alternatively, A could satisfy the Lien and unencumber the bitcoins by repaying the financing used to purchase the bitcoins. Unencumbering the bitcoins simply refers to the process of using some combination of unrealized gain or additionally deposited funds, or both, for the purposes of paying off the financing and removing the Lien. In the above example, A could deploy the unrealized gain of $15.00 to partially unencumber the bitcoins owned by her, thereby reducing the financed amount outstanding to B.
