Q1: Can you briefly introduce yourself as well as the acBTC project?
My background spans across primary and secondary capital markets covering commercial and product strategies
I started my career with S&P Global, a U.S. credit rating agency in driving product strategies for the investment management segment.
After leaving the corporate world in 2016, I started a foreign exchange trading affiliate platform. This project actually angled me into the crypto and blockchain space.
We started NUTS Finance in 2018, with the motivation to leverage blockchain technology to improve existing workflows within the financial services industry.
Our first product was the NUTS Platform, it is a blockchain agnostic middleware solution. The problem we are trying to solve with the NUTS Platform is to empower financial application builders by providing secure, composable and simple-to-use technology toolkits
The problem we are trying to solve with acBTC is to bridge liquidity between Bitcoin and Ethereum. Also to serve as the most usable form of ERC20 BTC on Ethereum.
We launched the staking application last weekend and so far we have over USD 10mm staked in the initial mining pool which will mint acBTC.
OK , a form of ERC20 BTC that sounds new to me, thank you for the brief introduction
Q2: acBTC integrates native BTC and ERC-20 BTC I believe this is a confusing thing from the community you can specifically detail about what the integration of native BTC and ER20-20 BTC is essentially both?
When we talk about native BTC, we are referring to Bitcoin on the Bitcoin network.
On the other hand, ERC20 BTC represents Bitcoin on the Ethereum network.
There are many different versions of ERC20 BTC currently
With Wrapped Bitcoin (WBTC) leading the pack with around 200k wrapped bitcoin minted on ethereum.
ERC20 BTC opens the door for Bitcoin holders to enter the DeFi ecosystem
Because the native Bitcoin network does not support smart contract, so it has limited DeFi use cases.
However, existing ERC20 BTC are still facing some problems
1. Limited competitive decentralized financial applications
2.Susceptible to slippage when exchanging between ERC20 BTC
3. High user cost and friction when converting between native BTC and ERC20 BTC
Therefore, we have developed acBTC, a composite asset backed by a basket of ERC20 BTC
The problem acBTC aims to solve is to increase usability of ERC20 BTC in DeFi applications such as swap, savings and lending/borrowing.
Q3: Currently, DEFI is a new trend bringing benefits to the market for LOAN service users. There are many projects going on so can you tell us what special you have that we should use acbtc.fi?
1. acBTC allows borrowers to maximize the collateralization level by using acLoan
Right now the collateralization level for ERC20 BTC for existing DeFi lending protocol is anywhere between 30 to 40%
acLoan aims to address the problem of low collateralization of ERC20 BTC, hence, acBTC is a more efficient collateral asset for lending/borrowing
2. Most of the existing lending protocols require borrowers and lenders to constantly monitor the LTV (loan-to-value) ratio
If LTV falls below a certain threshold, the borrowing position would be liquidated (also known as margin call).
In the acLoan application, we introduce the concept of intrinsic value for acBTC. Meaning, lender and borrower can agree on the price of how much one acBTC is worth.
For lenders who can tolerate a higher risk level, they can agree to a higher intrinsic value (ie. 10k at current market prices).
That means the Borrower can take out 10k by collateralizing 1 acBTC.
Also, we introduce the idea of using a moving average price to determine liquidation trigger.
So instead of having to constantly monitor the market prices and LTV, we calculate the average price and compare that to the instrinsic value
If the average price over a period (ie. 7 days) falls below the intrinsic value, then liquidation would occur.
This removes the need to constantly monitor short term price action for both Borrowers and Lenders.
These two new features are something which we believe can improve the existing lending/borrowing workflow
Thanks acBTC project for trusting and organizing AMA with us !!
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