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GAINS Associates

acBTC — Telegram QUIZ & AMA — October 24

On Saturday, October 24, we had the pleasure to welcome to our Telegram chat:

Terry Lam, Co-Founder of acBTC.

We asked him questions about the development of acBTC.

Some sentences have been slightly edited for readability but the meaning has been conserved.

Summary

acBTC is a composite asset-backed by a basket of ERC-20 BTC, designed to maximize usability for decentralised financial applications.

WBTC is a solution that bridges bitcoin over onto the Ethereum network. WBTC holders can mint acBTC by depositing WBTC into a composite basket.

acSwap is where ERC20 BTC holders can swap between WBTC, renBTC, acBTC at reduced slippage and lower cost than existing swap applications.

The acBTC ecosystem is set up as a DAO to rely extensively on community governance to grow.

Introduction

Q — Alex Raffin from GAINS: What did you do before crypto, how did you get into crypto and did you have any other venture in crypto previous to being involved with acBTC?

A — Terry Lam from acBTC: My background spans across primary and secondary capital markets covering commercial and product strategies.

I started my career with S&P Global, a U.S. credit rating agency in driving product strategies for the investment management segment. After leaving the corporate space in 2016, I started a foreign exchange trading affiliate platform. This project angled me into the crypto and blockchain space.

Product

Q — Alex Raffin from GAINS: Tell us your role at acBTC and what the project is about.

A — Terry Lam from acBTC: Before I talk about acBTC, I want to quickly explain the relationship between NUTS Finance and acBTC. S&P is the company that created the S&P 500 index. NUTS Finance is the development company behind acBTC. We started NUTS Finance in 2018, with the motivation to leverage blockchain technology to improve existing workflows within the financial services industry.

The first product we launched was the NUTS Platform. It is a blockchain agnostic middleware solution. The problem we were trying to solve with the NUTS Platform is to empower financial application builders by providing secure, composable and simple-to-use technology toolkits.

Q — Alex Raffin from GAINS: Are there people from the traditional world that use the NUTS platform?

A — Terry Lam from acBTC: Yes. We have onboard a traditional wealth management platform which we helped build a swap application on top of the NUTS Platform.

Our second product is acBTC, which we will talk about.

Q — Alex Raffin from GAINS: What’s acBTC?

A — Terry Lam from acBTC: acBTC is the most usable form of Bitcoin on Ethereum.

Q — Alex Raffin from GAINS: How is it different/better compared to wBTC and other tokens that represent BTC on the Ethereum network?

A — Terry Lam from acBTC: wBTC is a solution that bridges bitcoin over onto the Ethereum network.

They provide a great solution and awesome project to bridging (ahem centralized custody by BitGo though). In short, WBTC is solving a bridging problem, whereas acBTC is solving the problem of providing better application and greater usability of ERC20 BTC.

Meaning with acBTC, a user holding onto WBTC can mint acBTC directly. Once they are holding onto acBTC, they can use it as a better collateral asset. Right now, with WBTC, a user can get anywhere between 30% and 60% if they collateralize WBTC. Whereas with acBTC, the borrower can collateralize acBTC at a higher (or more flexible) level, because we are building the acBTC loan application to support this.

Simply put, acBTC is solving the usability issue of ERC20 BTC.

Q — Alex Raffin from GAINS: Do you deposit your wBTC to a Smart Contract and then get acBTC in return?

A — Terry Lam from acBTC: Exactly.

Q — Alex Raffin from GAINS: Can you do the opposite operation easily as well?

A — Terry Lam from acBTC: Yep. Let me explain. WBTC holders can mint acBTC by depositing WBTC into a composite basket (essentially it’s a smart contract). acBTC can be minted on a 1:1 basis with WBTC. The minting process is free (the user only has to pay the gas fee), once the user decides he no longer wants to hold onto acBTC.

The user can redeem the WBTC by using the Redeem application. Essentially the user deposits acBTC into the composite basket, and WBTC will be returned. However, the return ratio will be subjected to the weights of the constituent in the basket at the time.

Q — Alex Raffin from GAINS: When you talk about “Higher returns on yield strategies”, do you have some numbers?

A — Terry Lam from acBTC: If the basket has 70% WBTC, 30% renBTC, the user redeeming 10 acBTC will get 7 WBTC and 3 renBTC back. This is to keep our composite basket balanced. If the user wants all 10 WBTC, then he/she can use our acSwap function to swap the renBTC back into WBTC. We launched acBTC on 4th October 2020.

The first application we launched was a liquidity mining program. The first pool in the program is called Big Blind. Users can deposit renCrv LP token (from Curve Finance’s Pool 5) into Big Blind and get AC reward + renCrv. The Big Blind Pool essentially showcases how we plan to obtain competitive yield.

What we did in the Big Blind Pool was, we utilized the renCrv LP token, put it back into Curve’s gauge to get more CRV (this is obtaining 1 part of the yield).

The second part of the yield comes from AC reward tokens. With the 2 parts added together, the yield is greater than users simply depositing WBTC or renBTC into the Curve Pool 5

Q — Alex Raffin from GAINS: Do you have an estimate of the numbers? How much is the APY on this Curve Pool 5 compared to yours?

A — Terry Lam from acBTC: Our acYield application will go through different liquidity pools currently in the market (given its risk/reward is feasible) and allocate accordingly.

The Big Blind Pool has ended. ITwas returning approximately 25% APY. Curve’s Pool 5 is returning under 10% APY as of now, so you can calculate the difference.

Q — Alex Raffin from GAINS: Will you create other pools, following Big Blind?

A — Terry Lam from acBTC: Yes. The Big Blind Pool is migrated to a new Pool called HODLER. HODLER essentially is a pool where users stake acBTC to earn AC + acBTC. Again, it’s a dual reward pool.

Q — Alex Raffin from GAINS: Does the Big Blind Pool means you shouldn’t pass on it?

A — Terry Lam from acBTC: BANG BANG. You are a poker player.

Q — Telegram user Jerry: Could you kindly explain the differences between Big Blind Pool, Straddle Liquidity Pool and Hodler Pool? How can investors participate in those?

A — Terry Lam from acBTC: Big Blind Pool was the genesis pool we launched on 4th October. This is a strategic way for us to bootstrap liquidity for the acSwap application. Users depositing renCRV LP tokens are essentially helping us bootstrap the liquidity required to start acSwap (WBTC, renBTC liquidity).

Big Blind lasted for almost 3 weeks. It went through migration and turned into HODLER. HODLER is where you can stake acBTC to earn AC + acBTC (collected from acSwap application fees). For those who missed out on Big Blind, you can still participate in HODLER. Join here.

Straddle is a LP pool where users can stake Uniswap ETH-AC LP tokens to earn AC. Essentially it’s a LP pool to reduce the speed of dump. Dumping is always part of the game where miners who have harvested AC sell immediately. To reduce the rate at which they dump, we created the Straddle Pool. Both the HODLER pool and Straddle Pool are active. Go participate NOW!

Q — Alex Raffin from GAINS: Does that mean it’s seen as safer or more trusted? Is it for people who already have wBTC and want to be able to get bigger loans?

A — Terry Lam from acBTC: If you trust WBTC, you should then also trust acBTC because acBTC is minted from WBTC. We are leveraging the existing ERC20 BTC liquidity on the Ethereum network to mint acBTC.

If the crypto community believes WBTC is the best way to bridge across Bitcoin onto Ethereum, then, by all means, they can use WBTC. After they get WBTC, if they want to engage in more competitive financial applications, they can mint acBTC with WBTC, get more leverage from acBTC, better swap execution and higher returns on yield strategies.

Q — Twitter user @JayRayCrypt: Is the acBTC team planning to create a platform to integrate all acSwap, acYield, xcSwap, acLoan products for easy access to users?

A — Terry Lam from acBTC: Yes! acBTC is an asset. acBTC is also an ecosystem of financial applications. The ecosystem includes acSwap, acYield, xcSwap, acLoan. The objective is to make acBTC as well as other ERC20 BTC more usable. We very much look forward to the explosive growth of the ERC20 BTC space. This will help propel the growth of acBTC also.

Check out our useful links to learn more!

Q — Twitter user @rich_hold: What is the difference between acSwap and acXcSwap? What are the advantages of acSwap and acXcSwap over existing DEX swap applications?

A — Terry Lam from acBTC: acSwap is the exchange of ERC20 BTC. Meaning users can swap between WBTC, renBTC and acBTC (initially, we will add more ERC20 BTC to the composite basket as we continue to develop). The advantage of acSwap over existing swap applications are:

  • Reduced slippage
  • Lower cost

xcSwap represents cross-chain swap, meaning users can exchange native BTC with ERC20 BTC. This is different from liquidity bridging (what renBTC or WBTC is doing).

Ultimately, we will utilize acBTC merchants to facilitate the supply and demand of acBTC. Meaning they will be the ones conducting the on-chain transaction to buy/sell acBTC with native BTC holders.

Q — Twitter user @inaltswetrust: How does acBTC plan to offer a decentralized and efficient governance mechanism that satisfies the community?

A — Terry Lam from acBTC: acBTC ecosystem is set up as a DAO so, with the DAO structure, we rely extensively on community governance to grow and maintain the acBTC ecosystem. As I mentioned, initially our team would need to set the foundation to introduce the DAO structure.

Right now, we are still in a very early stage in terms of the project timeline. Not saying we want to put all the rules and guidelines in stone, because the fact is, it is likely to change. We have a governance framework. But we don’t have the details yet. Meaning we have the AC token which is a governance token behind the acBTC ecosystem.

AC holders can participate in maintaining and growing the acBTC ecosystem by:

  • Setting application parameters (fees, performance, etc.)
  • Setting the AC emission rate
  • Adding/removing ERC20 BTC from the composite basket
  • Introducing/removing applications

This is the framework we have put forth, but again, the details are to be carefully considered before implementation.

Q — Telegram user Aleksandr: Which mechanisms do you use to keep the price equal to native Bitcoin?

A — Terry Lam from acBTC: As I mentioned, acBTC is a composite asset-backed by a basket of ERC20 BTC. Right now, WBTC and renBTC are in the composite basket. This means users can mint acBTC with WBTC or renBTC.

Since it is backed 1:1, the price of acBTC is also pegged. Keep in mind that only ERC20 BTC with physical backing of native BTC is enlisted in the composite basket. Ultimately, acBTC price = BTC price.

Q — Telegram user Thunder 🔥: You have set the goal to reach 2k acBTC tokens minted in 2020. Why this number specifically?

A — Terry Lam from acBTC: We set 2k as the goal by the end of this year because ultimately our metric of success is measured by the number of acBTC minted.

Right now, we have roughly 580 acBTC minted already. Not too shabby of a number to start with for a project that just launched 3 weeks ago. We set our target at 2,000 because that would put us in the 5th spot in the ERC20 BTC minted by volume. This is the current landscape.

Q — Alex Raffin from GAINS: What’s the business model?

A — Terry Lam from acBTC: The business model is the fees collected from applications. For example, acSwap has a small fee, acLoan has interest fees, xcSwap has a small fee, all the applications have a small fee. A portion of these fees goes back to acBTC holders. That’s their way to capture value. In terms of the team, it’s from the remaining portion. Ultimately, it is a straightforward business model.

Users like the applications, use it, pay a fee, we are happy, everybody is happy, acBTC the happiest.

Q — Telegram user Oleg ⛵️ Dubinskiy ⛳️: It is written on your website that swap has minimal slippage and zero costs. How do you ensure high liquidity to avoid slippage?

Which liquidity pool can I participate in with a small number of coins?

A — Terry Lam from acBTC: The whole theory behind minimal slippage is this: we built acSwap by referencing Curve’s StableSwap mathematical model. They have built a robust swap protocol where they can control slippage. We took that to another level by modifying the amplification coefficient parameter where slippage is even more tightly controlled. In simple words, by adjusting the AC of the formula, we can reduce slippage given the same amount of liquidity depth.

To the cost question, Curve currently charges 0.04%. acSwap charges 0.02%. Right now, our active pools are Straddle and HODLER. Straddle is where you can stake ETH-AC LP tokens from uniswap to earn AC. HODLER is where you can stake acBTC to earn AC + acBTC. Both give great value if you ask me.

However, I do want to point out that providing liquidity on Uniswap can expose the liquidity provider to Impermanent Loss. Please do your research before participating.

Team

Q — Alex Raffin from GAINS: How many people are in the team? Do you consider it is only the team from NUTS Finance or is there a dedicated team?

A — Terry Lam from acBTC: Let me finish off with the relationship between NUTS Finance and acBTC. For all the gamers out there, I like to use this analogy.

Rockstar Games is the publisher of GTA, Red Dead Redemption, Max Payne, etc. That’s kind of like how NUTS Finance is with acBTC. NUTS Finance is the development firm behind NUTS Platform, acBTC, etc.

Our core capabilities are smart contract development, security and financial engineering. We build a project, maintain it to a point where the community can take over and sustain it, then move on to the next project. acBTC is our second project and everyone on the team is working on it.

Finance

Q — Alex Raffin from GAINS: Did you raise funds for this?

A — Terry Lam from acBTC: We raised a small seed round back in 2018 when we first assembled the team and began our journey.

Business Development

Q — Telegram user Irina: Can you give us more details on four of your campaigns; Testers, Weekly Missions, Periodic Promotions and Official Community Dealer?

A — Terry Lam from acBTC: These are all programs for the community to earn free AC tokens. Free!

  • We recently updated Testers to Bug Bounty, where users can locate bugs on our platform and receive small AC rewards for helping us improve the product.
  • Weekly missions are gamified tasks to complete weekly, essentially to leverage the community’s network to promote acBTC.Simple tasks like retweet, follow, share, are included in the weekly missions. Join our Discord channel to complete a daily mission.
  • Periodic promotion is when we need to make a big push for a campaign. For example, feature rollout, partnership introduction etc. Again, this is to leverage the community’s network effect to help raise awareness for acBTC.
  • Official community dealer is where users have completed all the weekly missions and are certified to speak/promote upon the acBTC project.

Q — Alex Raffin from GAINS: Do you plan on adding other features to acBTC in the future?

A — Terry Lam from acBTC: acSwap is where ERC20 BTC holders can swap between WBTC, renBTC, acBTC at reduced slippage and lower cost than existing swap applications.

After acSwap, we will be launching acYield. acYield will be launched before the 2nd week of November. acYield is a yield optimizer for ERC20 BTC. Meaning somebody holding WBTC and deposit into acYield to generate a competitive return after acYield, we have xcSwap. xcSwap will be launched before the end of this year. xcSwap stands for cross-chain swap, where native BTC can be exchanged for ERC20 BTC.

After xcSwap, we have acLoan. acLoan will be launched before the end of Q2 2021. acLoan is a hybrid loan/option application where borrowers and lenders can determine an intrinsic value for acBTC to be used as collateral assets. acLoan is the main event because it will change how lending/borrowing is currently done in the decentralized finance protocol space.

Thanks, Terry, I enjoyed learning more about acBTC. Keep us updated. Where can we follow you? — Alex Raffin from GAINS

Thanks for hosting, Alex. It was great sharing with you guys. Follow us on Discord, Telegram, Website and Twitter. — Terry Lam from acBTC

Join us now! Enjoy quality articles, daily curated news, insightful infographics, and enter a vibrant, fun, and knowledgeable community!

If you want to email us: contact@gains-associates.com.

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GAINS Associates provides you with the latest news and research in blockchain and crypto. It’s a community for everyone to learn and grow together.

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