Introducing Threshold tBTC Loans on MYSO!
Exploring the new Threshold tBTC integration on MYSO and available loan offers
Flipping the Script
At MYSO, we’re constantly exploring new and innovative use-cases for our peer-to-peer Zero-Liquidation Loans. As you may already know, a Zero-Liquidation Loan on MYSO can be seen as a swap between a borrower and lender — the borrower pledges collateral, which is then swapped with a lender for a combination of a loan token and a call option on the collateral token. From a financial engineering perspective, the lender’s position in this swap is similar to that of a covered call (where the lender is thus long the borrower’s collateral while ‘selling’ them a call option on it). This call option gives the borrower the right, but not the obligation, to reclaim their collateral prior to some expiry date.
This design allows many innovative strategies to be explored, as this embedded optionality allows users to structure their own risk, rather than simply accept it. Nonetheless, most loan offers on MYSO (and most other DeFi lending markets) feature lenders accepting more volatile tokens as collateral and lending out stablecoins (or generally more stable assets) against them to earn a risk-adjusted yield.
But what if we turned this around — what if lenders were the ones lending out a volatile asset and accepting stables as collateral? What’s the rationale behind this type of loan and what makes this a unique and exciting opportunity?
To answer this question, let’s explore the new integration of Threshold’s tBTC on MYSO and new loan offers where you can borrow tBTC against stablecoin collateral!
tBTC integration on MYSO
At MYSO, we’ve stressed our commitment to permissionless, non-custodial solutions for conducting financial interactions. We’ve built MYSO to align with these goals to the utmost level and support any and all projects with a similar goal.The original and most prominent proponent of this ideology is undeniably Bitcoin.
With that being said, existing solutions like wBTC that bridge Bitcoin to Ethereum require users to send their Bitcoin to an intermediary in exchange for an ERC-20 token that represents the original asset. As it turns out, this model is quite centralized, requiring you to trust a third party and is susceptible to censorship, threatening the premise of Bitcoin as a sovereign, secure, permissionless digital asset.
Threshold’s tBTC is a stark alternative to these existing solutions and stands as a decentralized (and scalable) bridge between Bitcoin and Ethereum. Instead of centralized intermediaries, tBTC uses a randomly selected group of operators running nodes on the Threshold Network to secure deposited Bitcoin through threshold cryptography. tBTC thus requires a threshold majority agreement before operators perform any action with your Bitcoin. By rotating this selection of operators weekly, tBTC protects against any individual or group of operators colluding to fraudulently seize the underlying deposits. Threshold provides some statistical modeling which calculates the likelihood of compromise by dishonest operators (which turns out to be very low due to relying on an honest-majority-assumption). In addition, an insurance backstop (coverage pools), serves as an emergency fallback in the event a wallet is compromised.
Users of tBTC trust math, not hardware or people — an ideology we stand behind.
Now, let’s get back to our original discussion — we’ve now integrated tBTC on MYSO and there are loan offers available for you to pledge USDC as collateral and borrow tBTC!
By pledging stablecoin collateral and borrowing tBTC, you are not only receiving tBTC but also purchasing a call option on tBTC for an upfront fee (similar to the premium for buying call option contracts). This means that you have downside protection on your Bitcoin exposure, as you can repay the tBTC at any time prior to expiry and reclaim your locked stablecoin collateral!
On the other hand, if the price of Bitcoin (and thus tBTC) rises above some price (value of locked stablecoin collateral + upfront fee), you can simply keep the tBTC and not repay the loan!
This means you can make use of MYSO’s Zero-Liquidation Loans to have downside protection while also participating in Bitcoin upside — a truly innovative approach to on-chain borrowing!
Ready to explore this unique borrowing opportunity?
Head over to https://app.myso.finance/ today and redefine your financial strategy with MYSO’s innovative loans and the new tBTC integration!
