firefish

[void]

can you tell more of firefish? (in a separate thread)

so this is a product for those who think/understand that bitcoin price in fiat will only grow and want to hold under all circumstances

even if one is less optimistic yet having some bitcoin for whatever reason selling in most cases and jurisdictions involves taxation of profit

the idea behind this project is simple - never sell, use BTC as collateral, borrow, no taxable event, no taxes, with bitcoin price growth and proper risk management one has potentially infinite line of credit and well documented source of funds

firefish is a relatively new company based in Prague, founders from Slovakia I think, co-owned by reputable joint venture fund operating in the V4 region

the project is currently in "invitation only" beta and should be (I think) open to public in Q1 of 2024

the platform pairs two sides, a bitcoin owner (borrower) and lender willing to accept bitcoin as collateral
it's not exactly mature when it comes to options and currently limited functionality is available (limited size of loan, due in one year, 50% LTV, if I'm not mistaken)

the key feature is the fact that it's not custodial - bitcoin is locked in multisig smart contract on the base layer, neither party is capable to move the coins during the contract

once the loan is repaid collateral is released

if it's not it gets liquidated (in current implementation the whole collateral goes to the lender)

if current value of collateral drops too much there comes a classic margin call and the borrower is supposed to top up the collateral value - failure to do so results in forced liquidation

there are clearly many reasonable alternatives how to construct the deal, hopefully they will roll out more soon

I have nothing to do with the company itself (actually I would criticize a lot of things regarding the design), just closely watching what's new in this area because of my strong believe this is the kind of tool with great future as bitcoin will suck in instruments like gold, art, bonds, pension funds, in general all the stuff that people hold only out of necessity as there is no other resort - once they realize that there is money that cannot be diluted and can preserve their wealth passively then... moon (you know the story )

feel free to ask specifically, I will try to answer or find out for you

 

[jafo]

Wow! Very interesting! I may have to apply this for a loan I am giving a veterinary medicine University student. I'm thinking....even without the necessary tools

 

[DeepDrilling]

nice article, thank you for sharing.

 

[JohnnyDoe]

What are the advantages over Binance loans, apart from the decentralized holding?

 

[369]

Nothing new....there are already decentrelized platforms offering it even where everyone can set its own rules and duration.
The only problem these platform are facing is big liquidity.

For example folks.finance is offering such service run via algorand
or bitshares dex

 

[Martin Everson]

Their business model is nothing special and would be dead in a flash crash sadly.

I discussed something similar to this in another thread. Such business models where large crypto market movements that trigger a lender liquidation can trigger a chain reaction resulting in a flash crash. In such a scenario the company will profit as both parties loss out as company WILL front run the liquidation orders...lol . Also such a business model does not scale well from a risk perspective without a very deep pool of crypto liquidity once you get near the 100's of millions or billion.

 

[JohnnyDoe]

Their business model is nothing special and would be dead in a flash crash sadly.

I discussed something similar to this in another thread. Such business models where large crypto market movements that trigger a lender liquidation can trigger a chain reaction resulting in a flash crash. In such a scenario the company will profit as both parties loss out as company WILL front run the liquidation orders...lol . Also such a business model does not scale well from a risk perspective without a very deep pool of crypto liquidity once you get near the 100's of millions or billion.

Better to stick to binance

 

[369]

Their business model is nothing special and would be dead in a flash crash sadly.

I discussed something similar to this in another thread. Such business models where large crypto market movements that trigger a lender liquidation can trigger a chain reaction resulting in a flash crash. In such a scenario the company will profit as both parties loss out as company WILL front run the liquidation orders...lol . Also such a business model does not scale well from a risk perspective without a very deep pool of crypto liquidity once you get near the 100's of millions or billion.

Bitshares dex had these kind of targeted attacks on their core collateral token very offent were somebody attacked the price on purpose in a downtrend to trigger all collateral to be sold at heavy discount.

Basicly he shorted on CEX to dump the price on cex which dex'es takes as refferance of value and bought back cheap with discount on dex from triggered colleteral.Since data on dex is fully public its very easy to plan these kind of moves.

Once the colleteral is being sold on dex itself it triggers an even bigger down movement as trading bots are buying the cheap tokens on dex and sell it instantly on cex for a profit creating a big down move spiral.

 

[void]

What are the advantages over Binance loans, apart from the decentralized holding?

I don't see any, the centralized solutions will always come with less friction, more liquidity, etc. but the non-custodial on-chain implementation is the killer feature
binance is hardly an alternative, totally different beast, I would never go down this path, the less now

Their business model is nothing special and would be dead in a flash crash sadly.

I discussed something similar to this in another thread. Such business models where large crypto market movements that trigger a lender liquidation can trigger a chain reaction resulting in a flash crash. In such a scenario the company will profit as both parties loss out as company WILL front run the liquidation orders...lol . Also such a business model does not scale well from a risk perspective without a very deep pool of crypto liquidity once you get near the 100's of millions or billion.

these are valid points


I think they should implement it in much simpler fashion without any margin calls - the risk of the loan being undercollateralized can be easily incorporated into the interest, it's way more transparent approach