acBTC x MXC<>AMA Recap January 12, 2020
Please introduce yourself and your team
My background spans across primary and secondary capital markets. I began my career with S&P Global, a U.S. credit rating agency. After leaving the corporate space to build my first fx trading startup project, it angled me into the crypto and blockchain space.
My partner and I started NUTS Finance in April 2018. NUTS Finance is the development DAO for the acBTC project. Our vision for NUTS Finance is to leverage blockchain technology to enable an open financial system.
We are 3 years into our journey and still embracing all the new developments and learning opportunities in the blockchain space.
What is acBTC? What is the working mechanism of the acBTC ecosystem?
We can look at acBTC from two angles. First, from an asset standpoint; acBTC is a composite asset backed by a basket of ERC20 BTC. Second, from an application standpoint; the acBTC ecosystem is made up of multiple DeFi protocols including swap, savings and lending.
Therefore, we can describe acBTC as “single asset, multi-protocol” system. acBTC is designed for usability.
On the asset level, acBTC aims to be the most efficient form of collateral and yield generation asset. On the application level, the acBTC protocol suite aims to maximize usability for the ERC20 BTC asset group
The engine behind acBTC is the acBTC composite basket. The acBTC composite basket is currently made up of WBTC and renBTC. Holders of WBTC and renBTC can mint acBTC directly
Can you tell us about AC token?
AC is an ERC20 governance token for the acBTC project. AC holders can participate in the governance of the acBTC system.
Since acBTC is a “single asset, multi-protocol” system. In other words, a multi-protocol system has much greater demands for sound decision making relative to single protocol systems.
AC contract address: https://etherscan.io/address/0x9a0aba393aac4dfbff4333b06c407458002c6183
What are the distinguished advantages of acBTC compared to other similar projects?
A number of ERC20 BTC projects are working on bringing native Bitcoin onto Ethereum (wrapping and unwrapping of assets). We look at these projects as strategic partners because acBTC is focused on solving for the usability challenge faced by many ERC20 BTC assets
Also, the acBTC composite basket is made up of different ERC20 BTC, the more ERC20 BTC there are in the ecosystem, the composite basket becomes more diversified, hence less concentration risk
Therefore, the key differentiation between acBTC and other ERC20 BTC project is that we are highly supportive of other ERC20 BTC projects and we are not adopting a displacement strategy.
We have formed strategic partnerships and are working closely with renBTC, HBTC, oBTC and looking to include more ERC20 BTC assets to the acBTC ecosystem
What are the usage scenes of AC token?
There are 2 distinctive use cases for AC:
- Governance of the acBTC system
- Yield generation
Holders of AC can initiate proposals and participate in decision making to upkeep the acBTC system. For instance, items that require decision making includes:
- Add/removal of constituents to the acBTC composite basket
- Add/removal of protocols to the acBTC ecosystem
- Protocol fees settings
- Swap/mint/redeem fees
- Savings performance fees
- Loan origination and settlement fees
- AC token allocation and emission settings
- Adjustment of AC allocation between liquidity mining pools
- Increase/decrease AC emission speed
AC holders can participate in the savings strategies to generate effective returns on their AC holdings. Currently, there are 2 savings strategies designed for AC holders:
Can you explain what your token economics distribution is? How many tokens will be minted? How many tokens will be locked by the team?
The total AC Supply is 21,000,000.
15,000,000 AC (71.4%) is allocated for community through liquidity mining and ecosystem incentives.
6,000,000 (28.6%) is allocated to fund research and development and ecosystem partners.
AC tokens distribution is divided into 4 phases (Phase 0, 1, 2, 3)
- Phase 0 makes up 10% of total supply (2.1mm)
- Phase 1 makes up 20% of total supply (4.2mm)
- Phase 2 makes up 30% of total supply (6.3mm)
- Phase 3 makes up 40% of total supply (8.4mm)
The goal is to align distribution with product development and ecosystem building. We are currently in Phase 1, the circulating supply is 2.52mm.
There is no lockup period because AC is minted on a weekly basis with no pre-mint or pre-mine
What issues does acBTC aim to solve?
There are 3 key issues:
- Single point of failure
- User Friction
Let’s dive in on usability because we believe this is the biggest bottleneck for driving ERC20 BTC mint volume currently. In our opinion, the majority of ERC20 BTC are not efficiently put to use due to:
- Overcollateralization requirements in lending protocols
- Lack of sustainable returns in savings protocols
acLoan and acSavings aim to innovate in both areas, namely:
- acLoan is a hybrid lending/option protocol that enables:
- Borrowers to borrow stablecoin against acBTC at flexible collateralization levels without stressing over liquidation risk caused by extreme price volatility over a short time frame period (ie. 15% to 20% over 2 to 3 hours), and/or;
- Traders who have a bearish outlook on BTC prices can enter a borrowing position to replicate a quasi buy put option strategy against traders who has a contrasting bullish outlook on BTC prices;
- acLoan aims to satisfy demands for real borrowing and lending interests and;
- At the same time offers a unique way for traders to speculate on bullish/bearish sentiments through strategies that mimic put option characteristics.
Quick conceptual example:
- Alice, who has a bearish outlook on BTC price (Borrower) buys a put option (takes out a loan collateralized against acBTC) by paying premium (interests paid) to Bob who has a bullish outlook (Lender), who collects the premium (interests earned) for writing the put (lends out USDT);
- If BTC price increases, Alice would have no need to exercise the put option (in other words, it is better off for Alice to return the principle to get back her acBTC from Bob);
- If BTC price decreases beyond the principal borrowed, Alice would exercise the put option (in other words, Alice keeps the principle and the acBTC collateral will be seized by Bob);
- By exercising the put option, Alice mitigated the price drop because she can now effectively purchase more acBTC from the open market for a lower price with the principle borrowed;
- From Bob’s standpoint, the exercised put option effectively allows him to purchase acBTC at a discount (interests earned).
2. acSavings is a yield generating protocol that offers above industry standard returns for the ERC20 BTC asset class.
- As mentioned numerous times, acBTC is a “single asset, multi-protocol” system, such design allows for multiple value capture avenues for ecosystem users.
- For instance: protocol fees collected via swap, savings, lending are all sustainable sources of yield for ERC20 BTC depositors
To summarize, our main focus for Q1 is to resolve the usability challenge for the ERC20 BTC asset class through acLoan and acSavings protocol.
What benefits can acBTC investors get by holding AC?
- 1. Yield generation: AC holders can participate in various savings strategies to generate effective returns from anywhere between 10% to 60%.
- 2. Participate in the governance of the acBTC project, in which sound decision making can lead to a robust ecosystem to further drive value capture for all AC stakeholders.