Replying to Avatar Super Testnet

Altcoins are dumb but lending protocols are cool. Consequently, I'm in a weird position where I want a p2p lending protocol that is bitcoin-only, i.e. you can only lend bitcoins to earn more bitcoins, and you can only borrow bitcoins by putting up other bitcoins as collateral
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James Pierog 10mo ago

P2P bitcoin-denominated bonds? Could be an interesting mechanism to facilitate loans, but I have questions.

How would one mitigate credit risk in a p2p context? Govt and corps issue fiat bonds to raise capital, and that works because people trust those institutions. In a p2p anon context that’s more difficult to assess. If Alice loans some money to Bob by purchasing Bob’s bitcoin bond, then what is stopping Bob from running away and not paying the BTC back?

If the BTC loan is over collateralised with more BTC, then what’s the incentive for taking out that BTC loan in the first place, when you already have that amount of capital to begin with?

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Super Testnet 10mo ago

> what is stopping Bob from running away and not paying the BTC back?

I figure Bob has to put up 2 btc collateral if he wants to borrow 1 btc

> what’s the incentive for taking out that BTC loan in the first place, when you already have that amount of capital to begin with?

Tax arbitrage might be a use case for btc-only loans

If you live in a land where btc gains are not taxed, lend them to folk who live where they *are* taxed

Then they spend the *new* (to them) btcs. Their *old* bitcoins are only collateral, which has no significant capital gains