The trade off lies in extreme scenarios. If BTC spikes, your investors are worse off. If BTC pukes, you are worse off. Overall, one doesn’t win at the expense of the other. Both win or both lose, just more or less relative to each other.
Discussion
Mashallah! This sounds like an amazing service!
One last question, for today 😁. How is the collateral btc held? What assurances do borrowers have for their btc?
This is the key in converting from theory to practice.
There are 3 main technologies I’m considering:
- Discrete Log Contract (DLC) technology employed by Lava for price data via oracle
- 2/2 Multisig Trading Wallet built by RadFi for liquidity / automated market making (AMM)
- Multi-Party Computation (MPC) wallet offered by MPCVault and others for payment streaming
This also speaks to the 4 components of the protocol. Locking BTC, price discovery, liquidity and streaming payments.
The lock itself is pretty easy to do with hashed timelocks (HTLC) which become a DLC when you add an oracle.
Price data via an oracle is needed to determine when payments should stop once the cap it hit.
AMM is needed to allow efficient trading of JV claims, improving stablecoin availability and also price discovery for cap/disc rate.
For streaming payments and making BTC safely available for the investors, it needs to be collected into a wallet and then claimed from there for which I believe a decentralized MPC wallet is best.
Amazing! When do you anticipate this will be available inshallah?
ChatGPT suggests it’s possible in 9-18 months and I’m not sure. Easier said than done! I see three phases and probably tons more steps and unknowns in between. If there’s a better or faster way to do them I’m all ears.
The lowest hanging fruit is providing people around the world with USD accounts to buy BTC over time with the JV DCA as an opt-in, offering discounts on all purchases. The goal would be to collect USD liquidity and let us test things on paper first.
If we have at least 200 users with $1K each committed to JV DCA, it means we can activate incentives to get people to pour in more liquidity, lock up BTC, and launch each of the tech components plus audit and stress test the system.
Once the system is up and running with $20M in liquidity, we can taper off the incentives and start partnering with exchanges and more institutional capital.
Amazing brother.