34 sats \ 4 replies \ @lendasat OP 10 Jul \ parent \ on: Building Lendasat on ARK - Introducing DLC VTXOs bitcoin
Just to clarify, as it might be confusing from your comment.
Using a collateralized loan on your Bitcoin makes sense when you think that the btc/usd price is going to appreciate in the next months, years. (if you are bullish). Because you will have to pay back your dollar loan at the market price at a later point in time.
Let's say today the btc price is at $65K, and you want to buy a new pair of shoes for $81. Today you'd have to pay ~125K sats for that. Assume the bitcoin price would appreciate to $100K you'd only have to pay ~85K sats.
With lendasat you can take a loan on the $81 and pay back $81 when the btc price is right.
https://m.stacker.news/38990
learn more at https://www.lendasat.com
Right, that's what I stated originally when speaking of different collateral to debt.
But when loan is the same debt as collateral, the relationship is reverse. So if you take a loan for bitcoin and get bitcoin back, you would use this for when market is in a downturn.
That said, lendasat site doesn't seem to indicate what you receive is a synthetic dollar using DLC instead of direct sats itself. Or maybe just wasn't clear to myself. 😅
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You do not receive a synthetic dollar.
Your Lightning invoice is paid instantly with Bitcoin, and you pay back later with Bitcoin, but in dollar terms.
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Understood. Then what would be the base denomination representation of the DLC dollar?
An inverse derivative locked contract like stablesats and what kollider built before is what I thought would be the base representation. Which means it would be a synthetic dollar.
Do you have any documentation explaining this portion of the contract and how you are attributing the derivative to make dollar representation?
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With a stablesats you would go short on Bitcoin, thus you will stay stable in dollar terms but not in bitcoin terms, meaning that you could end up with less btc if the market price appreciates.
With lendasats it's the other way around. You would basically go into an over collateralized long position with the lender, who would in turn go short. Thus the borrower takes the Bitcoin exposure while the lender takes the dollar exposure.
Do you have any documentation explaining this portion of the contract and how you are attributing the derivative to make dollar representation?
Not yet, but we will work on it.
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