---
description: >-
  Learn about the problems MortgageFi is trying to solve and how the protocol
  came about
---

# Protocol vision

For years in the nascent space of Decentralised Finance the staple market has been comprised of over-collateralised lending. Due to the lack of trust and anonymity of users, borrowers need to lay down more capital than they can borrow to ensure that borrowed funds cannot be extracted from the system without consequence.

Co-founder [Snape](https://x.com/snape88): "For years I'd been racking my brain attempting to solve the under-collateralised lending dilemma when it finally hit me one night, in short; we can lend the funds without releasing them"\
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After presenting the concept to fellow co-founder [Doc](https://x.com/derivative_dr) the seed was planted allowing the work to begin in formulating the protocol architecture and smart contracts that would facilitate a safe and stable management of a decentralised trad-fi mortgage style product.\
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Snape's original vision would be to offer on-chain mortgages that came with all the benefits of trad-fi mortgages, except for digital assets. Where in trad-fi there is the promise of full ownership of a bricks and mortar home upon completion of the mortgage, now the younger generations could aspire to own large sums of digital property through a crypto mortgage. &#x20;

Without prejudice anyone with access to the blockchain would be able to own a mortgage:

* without any credit rating
* from any country
* with a very small deposit/down payment (2% of borrowed capital)
* with fixed USD regular repayments
* of any size (above \~$100)
* for 2-30 years



### But that's not all

Whilst the original vision was to offer like-for-like trad-fi style long-term mortgages it's also true that MortgageFi offers high leverage (50x) loans protected from liquidation. This opens up the product to short term speculators. \
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When a user takes a mortgage they are not required to make a payment for a maximum of 45 days. In that time period they have a 50x leverage position that can be closed using the early repayment feature.\
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Typical leverage platforms are infamous for their liquidation risk for speculators when the market moves up and down. When assets prices are volatile high leverage positions are especially vulnerable to liquidations. MortgageFi shields speculators from this risk by swapping out liquidations for defaults that are only triggered if the borrower fails to make a payment within the 45 day window.\
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Any position can be kept open no matter how low borrowed asset prices go so long as they keep up their fixed regular repayments.\
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There's even more to discover about MortgageFi with our high yielding [Earn](../introduction/earn-product) and [Financing](../introduction/new-finance) products. Take a look around and don't hesitate to ask questions on [X](https://x.com/MortgageFiApp) and Discord.
