Source: CoinJournal
Title: Struct Finance introduces BTC.B-USDC Vaults for DeFi Yield Opportunities
Tortola, British Virgin Islands, July 12, 2023, Chainwire – Struct Finance, a DeFi platform that allows investors to engage with customized yield products using digital assets, is pleased to announce the launch of BTC.B-USDC Vaults.
The tranching-based BTC.B-USDC yield product is made possible through the leverage of AvalancheBTC.B (Bridged Bitcoin) for DeFi applications. The new vault complements Struct Finance's existing Genesis USDC Vaults and ushers in an exciting era of DeFi yield opportunities. Struct Finance built the new vault based on GMX's Liquidity Provider Token (GLP) to generate predictable returns for BTC in the form of fixed yields and USDC in the form of variable yields while utilizing a safe asset to minimize volatility and other risks.
"Our BTC.B-USDC Vaults represent an innovative application of Bitcoin in DeFi. We are fully leveraging Avalanche's Bridged Bitcoin (BTC.B) to bring forth a new wave of possibilities in the digital asset space," said Ersin Dalkali, Co-founder of Struct Finance.
While Bitcoin continues to dominate the market, the inherent absence of a DeFi layer has traditionally posed a major challenge in native yield generation. Avalanche has unlocked new opportunities for Bitcoin in DeFi with BTC.B (Bridged Bitcoin). Unlike WBTC, which relied on centralized bridges, BTC.B is minted through Avalanche Core – a decentralized bridge – and can be reliably bridged across networks using the Layer-Zero bridge.
Currently, Bitcoin investments in prominent lending pools yield between 0.2% and 0.5%. Even stable swap pools offering wBTC-BTC.B products only manage to achieve returns of about 2%. Struct Finance's BTC.B-USDC product overcomes these limitations and offers significantly higher yields.
The purpose of BTC.B is to enable BTC holders to explore DeFi opportunities on the Avalanche Blockchain without the need to acquire secondary tokens or rely on centralized bridges. BTC.B represents BTC coins transferred to the Avalanche Blockchain in the form of ERC-20 tokens. With over 6,000 bridged BTC and a fully diluted value of $180 million, BTC.B has carved a niche in the crypto space.
The Bitcoin ETF filings by BlackRock, WisdomTree, and Invesco – three of the world's leading asset managers – are not just mere submissions. They signal that the traditional finance sector is ready to embrace Bitcoin at a new level. Recently, the US Securities and Exchange Commission (SEC) greenlit a 2x leveraged Bitcoin ETF, triggering an enthusiastic wave of speculation and anticipation for the approval of a spot Bitcoin ETF.
Delta Hedging
Amidst the highly volatile crypto industry, Struct Finance's yield products allow users to allocate and bundle the risk of high-yielding DeFi assets into different parts, tailored to their risk profiles, through an innovative process called tranching. Each yield product is an individual vault split into two parts or tranches with different yield configurations:
- A fixed yield tranche for conservative investors seeking consistent returns
- A variable yield tranche for investors with higher risk tolerance, aiming for higher returns
The yield of the underlying asset initially flows into the fixed tranche to ensure predictable returns. The remainder is then allocated to the variable tranche, enabling increased exposure to the underlying yield-generating asset. Compared to the fixed tranche, the variable tranche can generate more, less, or no yield at all.
As part of its BTC.B-USDC Vaults, Struct Finance has implemented a unique approach to managing the investment risk: delta hedging. While the fixed tranche takes center stage with its high yield, the variable side of the product introduces an additional level of fascinating complexity and potential.
When providing funds to the vault, BTC.B on the fixed tranche is converted into GMX tokens, creating a short position between Bitcoin and GMX and resulting in a negative delta. In contrast, USDC on the variable side is converted into GMX, which naturally carries a positive delta.
This innovative delta-hedged product design achieves a delicate balance between positive and negative delta forces. The result is a robust strategy that allows investors to navigate the inherent volatility of the crypto market with confidence.
This intricate interplay of the fixed and variable sides within the vaults opens up the potential for investors to maximize the potential of Bitcoin investments like never before. By considering different risk appetites, Struct Finance ensures that both retail and institutional investors can tailor their strategies to maximize their returns regardless of market conditions.
About Struct Finance
Struct Finance is at the forefront of the DeFi revolution, aiming to transform the design and utility of financial products. It empowers users to design their own financial instruments while harnessing the power of tokenized high-yield positions to unlock a world of diverse investment opportunities. Furthermore, its state-of-the-art financial products are based on a tranching system that intelligently distributes returns across different investor classes. This balanced approach guarantees stable returns for risk-averse investors while offering the prospect of higher returns for more adventurous investors. Initially available on Avalanche, Struct Finance plans to transition to a multichain approach in the near future.
For more information, visit [website].
Disclaimer: This publication is for informational purposes only and should not be construed as financial advertising.
Contact:
Miguel Depaz
[email protected]
-
-
-
-
