10 sats \ 0 replies \ @TonyCai_ OP 12 Jul 2023 \ parent \ on: We are the co-founders of Atomic.Finance, AMA. (Non-custodial BTC yield) bitcoin
We're built on the bitcoin base layer, not a side chain!
This is possible using DLCs - which are what I like to call "fancy multisigs" that can be used to encode financial contracts on chain.
More details here: https://atomic.finance/blog/discreet-log-contracts/
I don't disagree with the classification of it being an affinity scam TBH. We have no intention of ever building there. (We're building Bitcoin native)
But, I listed it in case ppl had questions about it or wanted to ask us to compare and contrast
Good question! The way that the returns are generated in Atomic is fundamentally different from how Ledn does it.
When you lend with Ledn, you give them custody of your coins and they lend your coins out to market makers, trading firms etc. These firms then take your coins and use it for whatever their intended purpose is - levered trading, marketing making liquidity, maybe even wrapping it into wBTC and participating in DeFi etc.
With that - there's counterparty risk. The guys Ledn lent your coins to -- you need to trust them to not screw up. Hopefully they're not the next Alameda Research. Hopefully they don't get liquidated on their trade that they used your coins as collateral for. Hopefully opefully they didn't convert your coins to wBTC that they then deployed on a ETH DeFI platform that then gets hacked.
To your question, why does Ledn offer just 1% - because Ledn's yield comes from the interest rate that these borrowers pay. Currently there's not a ton of demand from borrowing BTC- so interest rates in the market are likely low, and Leon's rates reflect that.
With Atomic, returns are generated through selling covered calls - not lending. There's still some risk involved, there's not free lunch in BTC after all. but it's a very different risk profile. It's no longer a complete black box risk - where you gotta hope Ledn lends to the right ppl. It's no longer a situation where you're essentially risking 100% of your BTC for a few basis points of yield.
I chat more about the risk/reward tradeoff with Atomic here: #207400_
I don't disagree with the classification of it being an affinity scam TBH. We have no intention of ever building there. (We're building Bitcoin native)
But, I listed it in case ppl had questions about it or wanted to ask us to compare and contrast
I don't disagree TBH. We have no intention of ever building there.
But, I listed it in case ppl had questions about it or wanted to ask us to compare and contrast
Totally fair :) I'm ex-Android myself. But had to buy an iPhone when we decided we'd build on iOS first (it's a lot more easier for a small team - less variable like different screen sizes / aspect ratios)
Hope to be on Android soon!
100%, we're excited about covenants too! (if they happen)
Re: ConsenSys. Like many Bitcoiners, we're former shitcoiners. We raised capital from them when we were still a shitcoin project.
But that changed when we pivoted.
Can't really rewrite the cap table tho 🤷♂️
We outlined this journey in our blog: https://atomic.finance/blog/an-atomic-pivot/
It's in open beta currently!
Do you mean when it will be out of Apple Testflight? We're thinking by the end of the year!
What other strategies are there in the loop? Hedging strategies (hedge price downside), bi-directional strategies (short put and short call). Maybe some long call / long put Strats.
Is the app going to get complicated to use once you add more strategies and everything gets more sophisticated? I certainly hope not! I'm a big fan of simplicity and we spend a lot of time trying to make sure the onboarding experience is as simple as possible for folks.
Why covered calls? We chose covered calls first because we felt like they offer a good + conservative balance of risk / reward vs other strategies like short puts (especially considering BTC's occasional propensity to have serious 20+% black swan dump days)
But certainly interested in being able to launch additional strategies in the future.
No plans to offer this service for other coins.
Mitigating high fees: We have some longer term solutions around moving to DLCs on LN! Short term: we could consider increasing the length of each DLC cycle. (rather than an on-chain tx each month, moving to one every 2 months for example)
End goal: build a one stop shop where Bitcoiners have the financial tools to do more with their BTC - whether it's earning a return / getting a line of credit / hedging downside risk. And be able to do all that in a non-custodial + self sovereign and fully transparent manner, with the help of BTC's native tech like DLCs / LN
Re: Android we plan to make Atomic.Finance available on Android one day. Unfortunately no ETA at the moment. We're still pretty focussed on iterating the iOS version currently and improving that first!
If you have an iPad or M-series MacBook by chance, you'll still be able to use it 🤙
Re: Android we plan to make Atomic.Finance available on Android one day. Unfortunately no ETA at the moment. We're still pretty focussed on iterating the iOS version currently and improving that first!
If you have an iPad or M-series MacBook by chance, you'll still be able to use it 🤙
BTW the app is designed for options beginners and experts alike! If you do end up checking it out, we'd love your feedback on the in app education. :)
Yes it's possible! But likely not a lot a LOT longer, because that means the market maker would have to tie up a lot more funds over a longer period.
Great question!
Will explain this in a few parts.
#1 There's no free lunch in bitcoin… 🍔
So yes, you do need to take some risk to earn a return. After all, there's no risk-free rates and lenders of last resort in Bitcoin!
In particular, with covered calls, you sell an option to earn a premium / yield. The risk that you take by selling a call option is the possibility of capping your potential gains if bitcoin's price dramatically rises within the timeframe of the call option. So you may lose a small percentage of BTC in that case. ( a couple percent)
This is different from CeFi (BlockFi / Celsius) where you're risking your 100% stack with them for a couple basis points of yield
You might be saying: “But what if I'm bullish on BTC? What if I think BTC is about to rip up? Wouldn't a covered call strategy not make sense in that case?”
#2 So we designed a Passive Strategy to help you manage market risk 😎
Here's how:
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The strategy was developed and backtested using historical market data. It's a data-driven approach where the strategy enters into a covered call position only when it’s statistically likely for BTC to move sideways or downwards based on historical market conditions.
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The strategy only enters positions that are significantly “out of the money”. This means the Bitcoin price would have to rise a lot before you start losing upside.
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It adapts to the market on a weekly basis — by only entering covered call positions that are one week or shorter.
I usually say to folks: Think of the Conservative Strategy as a (transparent) autopilot 😌
Let's talk concrete examples: The bull run of Fall 2020, more recent example.
Despite BTC rising from $10K to $40K+ during the months of September 2020 to January 2021, the Conservative Strategy performed well - earning +4.21% during that time.
It managed to avoid serious losses by being conservative and remaining on the sidelines for much of this period.
Similar thing with the recent pumps mid-March (BTC pumped from below 20K to 30K in a matter of a few days / a week), as well as last month (BTC pumped from 25K to 31K in a couple days)
LMK if you have any additional questions! 💪
It was not too bad actually!
The trick is to be prepared to spend a couple months in the Bay Area / NYC / (maybe Austin for BTC startups?) - the places with high concentration of US VC's.
I think BTC ecosystem doesn't care about location!
But I can see how there may be an advantage early on to being in a BTC hub city like Austin / Nashville where there is a larger pre-existing location to tap into!