πŸ›΄The Stablecoin and Borrowing Protocol

Since the inception of Bitcoin by Lord Satoshi, his followers have constructed numerous structures on unstable foundations. One such foundation that is currently under intense scrutiny is stablecoins, which serve as a bridge between the cryptocurrency and traditional financial markets. As concerns grow, it is imperative to revisit and reaffirm the purpose of stablecoins. Only then can we comprehend the significance of their existence, determine the most suitable form for them, and find the best solution for the current situation.

As a fiat currency, the US dollar (USD) needs to be held within the traditional financial system. While cash can be used, it is not practical in a global economy where GDP is measured in trillions of USD. This means people often rely on banks to transfer USD for Bitcoin purchases.

The fundamental question is how we can eliminate the need for USD or any other fiat currency to purchase Bitcoin. Resolving this puzzle necessitates the majority of the world's largest economic systems to conduct transactions and receive wages in Bitcoin. This is the aspiration of true Bitcoin enthusiasts, as it would enable individuals to earn Bitcoin through work and eliminate the reliance on banking services. However, despite our efforts, there is still a possibility that we may never achieve this ultimate state.

Our motivation and solution to address this matter lie in the creation of a stablecoin backed by Bitcoin, the most valuable decentralized asset in the world. Stable-value assets play a crucial role in the foundation of decentralized finance (DeFi) applications and have amassed a value of tens of billions of dollars. B2B's objective is to establish the fundamental pillar of Bitcoin DeFi, upon which an entire ecosystem will be built for those who believe in the potential of Bitcoin DeFi.

In addition to the stablecoin, our initial sub-middleware will encompass a decentralized borrowing protocol that enables interest-free loans against BTCB, which serves as collateral, as well as a stablecoin called BTCU. Loans are disbursed in BTCU, a stablecoin pegged to the US dollar, and must maintain a minimum collateral ratio of 110%. Our borrowing protocol is a direct derivative of Liquity Finance.

Furthermore, in addition to collateral, the loans are safeguarded by a Stability Pool that contains BTCU and by fellow borrowers collectively acting as ultimate guarantors. For a more comprehensive understanding of these mechanisms, we encourage you to explore our updated documentation.

What are the key benefits?

  • 0% interest rate β€” as a borrower, there’s no need to worry about constantly accruing debt

  • Minimum collateral ratio of 110% β€” more efficient usage of deposited Bitcoin

  • Governance free β€” all operations are algorithmic and fully automated, and protocol parameters are set at time of contract deployment

  • Directly redeemable β€” BTCU can be redeemed at face value for the underlying collateral at any time

  • Fully decentralized β€” all B2B contracts have no admin keys

What are the main use cases of Liquity?

  1. Borrow BTCU against BTC by opening a Trove

  2. Secure Liquity by providing BTCU to the Stability Pool in exchange for rewards

  3. Stake $B2B to earn the fee revenue paid for borrowing or redeeming BTCU

  4. Redeem 1 BTCU for 1 USD worth of BTC when the BTCU peg falls below $1

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