Thread

Hahaha you opened up the JV Protocol sheet noiceee

😁. JV is for Joint Venture?

Yes indeed, I believe it’s the most fluid way to do business on the Bitcoin standard and use Bitcoin as money and avoid riba all at once

Alhuma barik! So I need to borrow $50,000...how does it work then?

The simple structure: Say BTC = $100K. A pool of investors offer you $50,000 and you put in $100K worth of Bitcoin (1BTC). You commit to buying out the investors at $70K over 48 months at 0.0208333 BTC a month and they accept the risk of Bitcoin going to zero.

The implications: You invest the $50,000 into a business or asset to generate revenues and ideally replace the 0.0208333 BTC faster. You could choose a fiat-equivalent payment if BTC is taxed in your jurisdiction but the fiat is still used to buy BTC for the investors. The effective cost of capital varies but overall if Bitcoin is up long term, it can be cheaper than borrowing from the bank. If Bitcoin is down in fiat terms, investors are bought out slower, otherwise they are bought out faster. The partnership is ended either when you run out of BTC (long bear) or the $70K cap is hit (fast bull). Overall, investors get into BTC at a discount to market, with less volatility and you get capital upfront with the opportunity to earn more BTC. Both bear the risk, you more than the investors.

Note: this is still theoretical and ratios, cap/discount rates and terms will adjust to market supply and demand

Let me know if I understood this correctly, I put up 1BTC @ $100k as collateral and a pool of investors go into a joint venture with me and lend me $70k, for example. Suppose I want to buy more BTC with it. I take the money and smash buy $50K in BTC. I pay back my partners regularly and if BTC pumps, my pay back time is shorter, if BTC slumps, I pay them back slower...At the end, if I pay back my partners, I get my collateral back... Is that right? How are they getting BTC at a discount?

Correct, this assumes you’re making fiat payments equivalent to the pump and slump values of BTC. The discount is basically achieved by you repaying a higher amount in fiat terms than what was provided to you. Generally, the market cap/discount rate will adjust so they earn a bit more BTC than the could have via DCA or a one-off purchase.

The trade off lies in extreme scenarios. If BTC spikes, your investors are worse off. If BTC pukes, you are worse off. Overall, one doesn’t win at the expense of the other. Both win or both lose, just more or less relative to each other.

Mashallah! This sounds like an amazing service! One last question, for today 😁. How is the collateral btc held? What assurances do borrowers have for their btc?

This is the key in converting from theory to practice. There are 3 main technologies I’m considering: - Discrete Log Contract (DLC) technology employed by Lava for price data via oracle - 2/2 Multisig Trading Wallet built by RadFi for liquidity / automated market making (AMM) - Multi-Party Computation (MPC) wallet offered by MPCVault and others for payment streaming

This also speaks to the 4 components of the protocol. Locking BTC, price discovery, liquidity and streaming payments. The lock itself is pretty easy to do with hashed timelocks (HTLC) which become a DLC when you add an oracle. Price data via an oracle is needed to determine when payments should stop once the cap it hit. AMM is needed to allow efficient trading of JV claims, improving stablecoin availability and also price discovery for cap/disc rate. For streaming payments and making BTC safely available for the investors, it needs to be collected into a wallet and then claimed from there for which I believe a decentralized MPC wallet is best.

Amazing! When do you anticipate this will be available inshallah?

ChatGPT suggests it’s possible in 9-18 months and I’m not sure. Easier said than done! I see three phases and probably tons more steps and unknowns in between. If there’s a better or faster way to do them I’m all ears. The lowest hanging fruit is providing people around the world with USD accounts to buy BTC over time with the JV DCA as an opt-in, offering discounts on all purchases. The goal would be to collect USD liquidity and let us test things on paper first. If we have at least 200 users with $1K each committed to JV DCA, it means we can activate incentives to get people to pour in more liquidity, lock up BTC, and launch each of the tech components plus audit and stress test the system. Once the system is up and running with $20M in liquidity, we can taper off the incentives and start partnering with exchanges and more institutional capital.

Amazing brother.