The problem
Why do we need an on-chain Bitcoin lending protocol? Because it solves one of the biggest problems in crypto today: Bitcoin is not a productive asset.
Unlike any other cryptocurrency, Bitcoin has captured the minds of Wall Street as a new reserve asset - a highly liquid digital gold. Yet, not all reserve assets are equal. Yielding reserve assets are king. In traditional finance, these yielding reserve assets are dollar-denominated bonds - with US Treasury bonds leading the pack. So how do we upgrade Bitcoin’s reserve asset status? By creating a thriving Bitcoin capital market where people provide BTC liquidity & borrow BTC.
Bitcoin lending products have been around for a while. Despite attracting billions of dollars in Bitcoin liquidity, they haven’t managed to convince most Bitcoiners to deploy their Bitcoin. Existing Bitcoin yield products have been unable to reach scale:
  • Centralised Bitcoin yield products didn’t scale because they require full custody over your Bitcoin. If these entities would end up forming the Bitcoin capital market, there will be a few huge points of failure (a couple of wallets to rule them all).
  • Wrapped Bitcoin yield products didn’t scale because they also require custody over your Bitcoin - either by an entity (e.g. Bitgo for Wrapped Bitcoin on Ethereum) or by a network that is not as secure as the Bitcoin blockchain (e.g. Ren Project).
Owning Bitcoin means owning a piece of the most decentralised computing network the world has ever seen. You don’t want to give that up.
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