1/11 - The future of Bitcoin lending
ZERO is a new protocol released by @SovrynBTC , a #DEFI platform built on #Bitcoin, using the @RSKsmart side chain, which combines #Ethereum Smart contract capabilities and the #BTC miner infrastructure.
2/11
We’ve all heard what has happened in the last days with things like #Celsius imploding and other #CEFI running into problems.
They were using clients colateral to bet on the market and in the end, the users had to pay the costs.
There is a clear need for a better system.
3/11
#ZERO is entirely different, you can lock your colateral #BTC in the smart contract and issue a loan of stable coins to yourself. You act as both the borrower and lender, there is no interest on your loan and no deadlines you are forced to meet, repaying it when convenient
4 /11
The colateral to loan ratio must always remain at 110% otherwise there is a risk of liquidation. Unlike Centralized exchanges, the colateral never moves, and it is never at risk. At any point in time, by giving back what you’ve taken, you collect all your initial #bitcoin
5 /11
What happens when the ratio falls 110%?
On ZERO you can also act as the “Stability Provider”. This allows you to liquidate lines of credit under the colateral target ratio.
When doing so you repay the users debt to the system and earn their collateral.
6 /11
Unlike centralised exchanges, every user can determine the amount of risk they will tolerarte, and there are incentives in place to liquidate bad loans as quick as possible. This helps mantain the stability of the protocol as a whole.
7 /11
Since everything is on chain, we can see in a transparent way just how many lines of credits have been issued at any given time. How much colateral ratio the platform as a whole has, and when users are getting close to the “danger zone”.
8/11
This signals users, when to get ready to liquidate, and judge the overall health of the protocol. Nothing like this exists on centralised exchanges
Not to mention is permisión less, uncensorable and no KYC!
9/11
It also allows for people to unlock the short term USD value of their Bitcoins without having to give up the long term appreciation of the asset.
Right now the protocol is on closed Beta but will be opening to the general public soon.
10/11
Every new protocol has its inherent risks and people should not put more money than what they are afraid of loosing
However, if successful, this could be a turning point for #Bitcoin adoption and utility.
11/11
ZERO was created by the Sovryn platform, built on @RSKsmart
This chain is merged mined by Bitcoin miners, making it the most secure smart contract platform in the world.
And the fees paid to use the network go to the Bitcoin miners, making the main chain stronger!
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