{ "episodeId": "SLP226", "speakers": { "stephan": { "name": "Stephan Livera", "role": "host", "tag": "STEPHAN" }, "max_keidun": { "name": "Max Keidun", "role": "guest", "tag": "MAX" }, "guest_2": { "name": "Guest 2", "role": "guest", "tag": "GUEST" } }, "segments": [ { "speaker": "stephan", "time": "00:09", "start": 9.17, "text": "Hi, you're listening to Stephan Livera podcast. Today we're talking about DeFi and whether Bitcoin can do it, should it be a thing in Bitcoin or is that just some altcoin gambling thing? Max Keidun, CEO of HodlHodl, joined me to chat. This show brought to you by Swan Bitcoin. In their effort to spread Bitcoin knowledge and awareness, Swan is giving away a free book in- Inventing Bitcoin rated four point nine stars by Swan co-founder Jan Pritzker. To get your free ebook or audiobook version of Inventing Bitcoin, go to swanbitcoin dot com slash freebook. All Swan asks is that you pay it forward, share the book with at least three family and friends, and if you join the Swan force at swanbitcoin dot com slash enlist, you'll get a special link to the free copy of Inventing Bitcoin that will help you recruit new bitcoiners. You can share the book with anyone, and if they eventually start sacking with Swan, you will get credit for Spread Bitcoin knowledge and Swan Bitcoin, the best and safest way to start accumulating Bitcoin, head over to swanbitcoin dot com slash freebook to get your free copy. HodlHodl is a peer to peer exchange with a new lending platform, and this is really cool because it's global, it's non custodial, it's anonymous, and it's using Bitcoin multisig. It's a fascinating new product allowing peer to peer lending and borrowing between users. Bitcoin is locked up in multisig escrow and the loan is funded using a stable- Stablecoins such as USDT. If you're a hodler who wants some liquidity without selling your Bitcoin, this is now another option to get fiat stablecoin liquidity. Or if you've got stablecoins and want interest, this is Bitcoin DeFi. With HoddleHoddle's Lend platform, you set your own terms and put up offers depending on how long you want to borrow or lend and interest rates. Go and check it out at lend.hoddlehoddle.com. Knox is a Bitcoin custodian dedicated to ensuring their insurance protection covers the full value of their customers' assets. For Suppose the fiduciary wants to hold two hundred and fifty million dollars worth of Bitcoin with Knox. Knox will seek to obtain two hundred and fifty million dollars of insurance dedicated exclusively to that account and adjustable to volatility, no fractional coverage or narrow scope, insurance for what it's worth, a tool to transfer risk. And check out my recent interview with Alex Daskalov from the team. If you are a Bitcoin company, investment fund, trust, or family office, check out Knox for your insured custody. The website is knoxcustody dot com. Max," }, { "speaker": "max_keidun", "time": "02:29", "start": 148.86, "text": "welcome" }, { "speaker": "stephan", "time": "02:29", "start": 149.14, "text": "back to the show." }, { "speaker": "max_keidun", "time": "02:30", "start": 149.68, "text": "Hey Stefan, thank you for having me again. It's a pleasure and an honor." }, { "speaker": "stephan", "time": "02:36", "start": 156.12, "text": "Of course, and I know you guys have been working really hard, so tell us a little bit about what you guys have been getting up to recently." }, { "speaker": "guest_2", "time": "02:44", "start": 163.71, "text": "Yeah, which is recently, like two weeks ago, we launched our, peer-to-peer, non-custodial lending platform, which is called simply lend at holo holo, which is available by going through to lend.holo holo.com. it's a peer-to-peer platform, We believe it's, it's to some extent a Bitcoin DeFi product. I'm not mentioning specifically Bitcoin DeFi because as I usually say, always when there's some kind of dispute or, or, or people are like trying to argue with me about the DeFi and being a true DeFi, I usually say that Bitcoin DeFi differs from other types of DeFi, like, for example, Ethereum one. But, yeah. This been, it's been a long road actually, still way, still a long way to go with our new product, but, you know, we're happy we're seeing a lot of positive feedback and, and we actually see a lot of user activity and volumes on our lending platform." }, { "speaker": "stephan", "time": "03:53", "start": 232.73, "text": "Yeah, so it's interesting, there's been a lot of chatter recently in the, more in the shitcoin world around DeFi, but, you're essentially talking here about Bitcoin DeFi. So how would you define DeFi?" }, { "speaker": "guest_2", "time": "04:09", "start": 248.78, "text": "yeah, I did my, own research, I made a presentation during one of the conferences, a few months ago, and also I did a small article. At, at the point when we were launching lending platform, and I actually defined it, Bitcoin DeFi with, three major whales, let's say, three major cornerstones that, that actually- needs to have any DeFi project that, that, that is, done within the Bitcoin space. The first one was, non-custodial, obviously. That's, that's, that's the core principle being non-custodial and, Not storing any crypto nor fiat and, because again, it, it aligns with the core principle of, of Bitcoin, not your keys, not your coins, or your keys, your coins. The second one is obviously allowing people to use your platform or use your product anon-anonymously means that you don't do any The due diligence, or you allow them to use their without passing any sensitive data to the third party. And the third one is actually pretty tricky. I already argued with some hardcore Bitcoiners about that, is, not having fiat or using stablecoins instead, of, fiat. Why? Because, well, when, when there's fiat, there's always a middleman, whether it's a bank or a payment institution or something like that. and whether there's the stable coins, there's, the role of the middleman is actually almost eliminated because, again, if you send Tether, for example, on a liquid network, let's say, then you do just a peer-to-peer, you know, I'm sending you directly, just like I do with Bitcoin. So yeah, these are like, like two major, things that should any Bitcoin DeFi project have, in my opinion." }, { "speaker": "stephan", "time": "06:13", "start": 373.28, "text": "Precisely. And so that's also been very much in line with the other products that HodlHodl has, which is also about this whole idea of non-custodial trading and so on. I think within this whole world of, you know, providing financial, you know, products in a sovereign way, I guess we could also talk about this idea of, you know, what it takes to make this kind of market work. And, you know, I think it's also important to consider, you know, some of us have been talking about this idea of order of operations that we have to get Bitcoin as money right first before people are coming out and Doing all these kind of complicated, you know, extremely complicated financial instruments and things that were happening in the more, in the altcoin DeFi world, but did you wanna just comment on whether those aspects of it have influenced the way you designed Bitcoin DeFi at Huddle Huddle?" }, { "speaker": "guest_2", "time": "07:03", "start": 423.03, "text": "I would say that we've built lending platform, which is obviously like, as I mentioned, it's the closest, closest to DeFi product that we've built to the date and, to this moment. And, I think we took a lot of examples and, we actually checked it out and did our research on other DeFi projects, like Ethereum-based projects. The main thing was, that we actually thought that we should make it, simpler. I actually call it internally that we rebuilt not a Bitcoin DeFi, we've built, we've built a simple Bitcoin DeFi because it's like if you will go on a lending platform and you will try to use it, it's in- In some cases, it's even easier to use our peer-to-peer lending platform than, centralized lending platform or custodial lending platform in terms of UI/UX. Of course, there's some-- there's like still some features need to be added, obviously, but the, the approach is very noob-friendly, I would say. Like we, we, as you mentioned pretty, like, I agree with you that most of Ethereum-based DeFi solutions are, they're built actually for sophisticated people Or for people who understand how crypto works or they're more in-dep-in-depth with their knowledges about how these all different types of blockchains work and all that stuff. As for our idea, the general idea was to make it as simple as it possible so that any person who is a little bit familiar with Bitcoin and also some Bitcoin or stable coins can use our DeFi project." }, { "speaker": "stephan", "time": "08:42", "start": 521.9, "text": "Right, it seems to me like as well, if I had to critique some of the altcoin DeFi- So in some cases, it seems like it's just a bunch of insiders and people who are super technical basically dumping on retail and dumping on people who are less technical and don't really understand what's going on in that system. Whereas, when I've, you know, taken a look through Hoddle, Hoddle, Lend, it really does seem more like a simple, you know, you stake some bitcoins as collateral and you get some stablecoin back as your loan, and then you repay that loan. I guess that's a very high level way of talking it, talking it Perhaps, if you could just talk us through what's the process there to do this, you know, as you said, non-custodial anonymous lending?" }, { "speaker": "guest_2", "time": "09:25", "start": 564.53, "text": "Yeah. Well, the process, i-if the person is familiar with HoloHodl trading part, it's like pretty simple for him, way more simpler than, than, you know, using any other product out there. But if you're not f-familiar, so what you do? It's a peer-to-peer marketplace, first of all, so you need to create an offer or you need to accept an existing Offers like some of them offer to borrow money, some of them are willing to lend you money. And so you go to the platform, you find an offer or you create your own offer with your own terms. Somebody accepts that, and, let's say you're a borrower, you want to borrow some stablecoins. Let's say you wanna borrow some Tether on Liquid. And, so you create a contract with the, with the lender. When this cre-contract is created, HodlHodl generates a unique multisig Bitcoin- An escrow account on a public Bitcoin blockchain. You, as a borrower, send our collateral, let's say one BTC, and you receive, when collateral is there, it's locked in the escrow. The escrow has three keys. One key is go to the lender, one key go to the borrower, and one key in, in case of a dispute, goes to hodl-hodl. And, when the collateral is in escrow, we inform all parties that you're free to proceed. So the lender sends you, well, agreed amount of- Stable coins. Let's say you have an LTV ratio of fifty percent, which means that, you will receive the loan, which is fifty percent of your collateral value, half of BTC, let's say, and you will receive, Tez directly to your Tez account, whether it's exchange or, or it's a wallet. You use it for, let's say, for a month, and, month is passed, and you repay Tez directly to the wallet of, of a lender with his interest, let's say it will be one percent per month And he releases bitcoins from collateral to your wallet. That's how it happens. So it's pretty straightforward, nothing, you know, there's no very sophisticated smart contracts, nothing like that. We just use Bitcoin multisig in order to lock the collateral, and we just made a lot of effort in terms of creating the proper UI/UX. As I mentioned, it's still far from perfect, but it's, for MVP, it's, it's really, really nice, and we, we've got a lot of positive feedback." }, { "speaker": "stephan", "time": "11:47", "start": 706.8, "text": "Yeah, and definitely looking through the platform when I was taking a look, you can see how when you go through that, process around, you know, executing it, you have to put in the, the two addresses, right? So you put in the address of your, like the Bitcoin address that you want to be returned the Bitcoin to, and then also you're putting in the address that you want the, in this case, for example, Liquid USD Tether to come to. So for example, the user might have Blockstream Green, and they might be doing Like we said, in this example, they're borrowing one bitcoins worth, and, oh, sorry, half a bitcoins worth, and they're putting up one bitcoin of collateral, and so they would receive, in this case, whatever it is, you know, seven and a half thousand or whatever USD Tether to their Blockstream Green. And so maybe if you could just talk us through a little bit around how that would look like from a, like, arbitration point of view, like if something goes wrong and how do you know when to fund it and things like that, Obviously, as I'm sure you know, Liquid has confidential assets and confidential transactions. How do you deal with that?" }, { "speaker": "guest_2", "time": "12:52", "start": 771.62, "text": "Yeah, so the first one regarding the arbitration. So when you, for example, when let's go through all stages of the contract. Now, you are in the first stage, obviously, you just accepted the terms. Then the, the multisig is generated, borrower sends Bitcoin to multisig address, which is obviously, and you can double-check it at any blockchain explorer. We also give you a link right in the contract. Contract will give you a link so anyone can verify that bitcoins are there, not only like, you know, trusting our system that we informed you that everything is fine. There, there's three confirmations and you can proceed with that. No, you can just, you can double-check by yourself in any explorer or in the explorer that we provide. Then, lender sends, as soon as he's informed that everything is fine, it's safe to transact, safe to send stable coins, sends the stable coins, he actually uploads the link from From a blockchain explorer which proves that he did this, did this payment and clicks that he has made a payment, then the borrower on his side confirms that he received this payment and confirms that the amount was precise, and only when the borrower will confirm that, then the contract will move to another stage. So we basically do double-check or we do double-verifying of the transaction." }, { "speaker": "stephan", "time": "14:12", "start": 851.52, "text": "I guess the other points to think about are the ways that you select and The ways people select their counterparty, because in this case, it just shows a range of different offers, and those offers are listed in terms of just the straight flat interest rate for the period. And also interesting to note, we were chatting actually about this, at the Bitcoin Bush Bash, and, one interesting point that was brought up is that it's actually not an APR rate, it's actually a term rate. So for example, if it was six months at six percent, it's actually a twelve percent APR." }, { "speaker": "guest_2", "time": "14:45", "start": 885.18, "text": "So, like, what? We're going to introduce the APR soon and add just extra, you know, extra field so that you can calculate APR as well. But we, we actually did that on purpose, taking the APR, because we have offers which are, like, let's say you are ready to lend money from two weeks to one month, and, you want to have, you're fine with like receiving one percent both for two weeks and both for, like, I don't know, for one month. So what will be the APR in this case? How you will calculate? Like that, is it twenty-four percent APR because I want to borrow money for, two weeks, or it's twelve because I want to borrow money for one month? Like, what's the APR in this case? So obviously we're, we're, we, we have, actually, like long time ago, we already have some features on the roadmap which will be added, in upcoming months. But we actually, and that's what, what, why I was referring that it's pretty noob-friendly, you know, we also had a feedback from people who aren't Lending market and they say, \"Well, for us, it's way more easier. There's no need for me to calculate the APR, I just see how much I need to pay or how much I will receive in case someone will, take a loan or give me a loan.\"" }, { "speaker": "stephan", "time": "15:59", "start": 959.11, "text": "Yeah, sure. Yeah, and for me, that wasn't intended as a criticism, I actually think it is more simple, it's, interesting because if you compare to the normal fiat world, there's a thousand different disclosures and X, Y, and Z and this warning and that Bitcoin DeFi world, it's actually very, very simple, and I think that also contributes to really lowering the level of friction required for somebody who wants to get a loan, whether that is a loan for them to get bus- to do a business or whether they, they wanna, you know, try and get more, you know, buy more bitcoins and like kind of lever up using this. but yeah, so maybe you could just tell us a little bit about what kind of opportunities you think this opens up for people." }, { "speaker": "guest_2", "time": "16:44", "start": 1003.6, "text": "I think that in general, you can- You can just, if you're not happy with the terms like you're, like lending or borrowing money now from your custodial Bitcoin lender, and there's a bunch of them, you can just, become lender or borrower with your own terms. I think it's pretty obvious and peer-to-peer lending is a new thing for Bitcoin, I believe, but in any case, it allows you to having more freedom and more controls over your funds, funds because, it's uncustodial. And I think- I think that actually being non-custodial is, sometimes it's even more important than being allowing flexibility to your user, because, you know, as we saw in re-recently in, I think yesterday was a news that there was there's one custodial lender who went to bankruptcy, I think from hundred to five hundred million of, worth of dollars are now like freeze within this lender, I think it's Krat or something like that, I don't know But that wasn't used. And they, they, they were custodial and obviously not a good thing in crypto. But anyway, there are a lot of custodial lenders who are doing just fine and, they're doing a good job anyway. I'm not, not, not criticizing, there's different approaches to- To, to any, any solution. But obviously also this is a new instrument in terms of, you know, adding more BTC to your portfolio, because we saw actually that the main use case at the moment is that people are using their own BTC that they have as a collateral, they're receiving stablecoin and they're buying more BTC in order to leverage their position, long position for a bull run. I believe it's a risky thing to do, honestly, but it's a use case Who am I to judge people how to, how to do and what to do with their own, with their own savings or with their own Bitcoin stash? You know, I know that people are actually using that. also there are a bunch of guys just making extra money, they have some stable coins, they don't want to be exposed to Bitcoin volatility, I don't know, maybe they're non, no coiners or maybe they like altcoins or whatever, and they're happy to lend this money for twelve percent, fifteen percent APR per year. And earn some just extra, extra money. So i-it's, for them, it's di-di-diversification or just extra income, and they're in control of that obviously because they, they see where's collateral, they see how, how it works, and everything is pretty transparent in there. And there's a third use case that might be where, well, obviously you, you just need some money for short term, you're, you want to, you don't wanna sell your BTC, you wanna hold to that, you want to be ex- Close to the price of Bitcoin, and, you just go and borrow some extra cash to cover your needs, not only liquidity needs in terms of trading, but also, I don't know, maybe some other needs. So th-these are use cases that we, we, we see now." }, { "speaker": "stephan", "time": "19:49", "start": 1189.06, "text": "Yeah, I see. and so essentially, there are some people who want to lever up and get more Bitcoin, there are some, on the other side who might hold stablecoins and want some return, and as you were saying, there might be some hodlers who don't wanna sell coins And perhaps they need to sell, though they would otherwise need to sell to get living expenses, but they are obviously bullish on Bitcoin and they believe that, if they, take out this loan and they've got income to be able to, repay those expenses or the, the loan at the end, then perhaps that's an opportunity for them. I guess while we're talking, obviously, and we'll cover, we'll get into risks soon, but I suppose one other opportunity that might come to mind for some people is, let's say you- You're a business entrepreneur and you have access to cheap fiat credit, right? That entrepreneur could theoretically go and get fiat loans, at, you know, a couple of percent or whatever, depending on what country, and then, so, as you explained, there are some of the use cases there might be some users who want to effectively go long and use it to lever up on Bitcoin, there might be some people who have stablecoins and want to lend them out for income, and, you know, maybe there's some- People who need to sell for living expenses, and instead of selling, they would just, they would rather get a loan. and then also there might be some users or some people who wanna do it as a business model, and perhaps they can get cheap fiat credit and borrow at a very cheap interest rate, and then lend out on HoddleHoddle's lend platform and then earn the spread as well. So perhaps that's also-" }, { "speaker": "guest_2", "time": "21:26", "start": 1285.92, "text": "That's actually, you, you've just created a new use case. So that, that might be, that might be also- Also one interesting thing, I know that there are people who are trying to borrow money for cheap on Lend and then go to, other platform or use the same platform like Lending and, and then lend this money. I don't know whether they're successful. But, yeah, that's kind of a new business model, you know, taking fiat somewhere else and then converting it to stablecoin and lending. That's, that's kind of, that could work obviously with the current interest rates, in fiat." }, { "speaker": "stephan", "time": "22:05", "start": 1325.01, "text": "So in some sense then, you're almost helping facilitate a lot of people who want to, you know, do that. And those business, those people who do that as a business model are effectively helping facilitate, you know, the people who want to go long on Bitcoin and so on. so I guess, I guess there's some Maybe we should chat about some of the risks then. So obviously the main risk for people will just be about getting liquidated. So I guess let's chat a little bit about some of those risks just so that everyone's aware what they're walking into. perhaps, you wanna touch on LVR and, you know, what is LVR? What is an LVR ratio?" }, { "speaker": "guest_2", "time": "22:43", "start": 1362.95, "text": "LTV, loan to value or LTV," }, { "speaker": "stephan", "time": "22:46", "start": 1366.28, "text": "yeah." }, { "speaker": "guest_2", "time": "22:48", "start": 1367.5, "text": "LTV ratio is basically, a ratio that shows you in each particular offer or in each particular lending contract how much, stable coins you will receive. Well, in the simple terms, you know, how much stable coins or how much the volume of, your loan will be, comparing to collateral that you will lock in. So for example, let's, let's take a simple example with numbers. you wanna, you wanna have a loan, worth of five thousand USDT, you need five thousand teaser, and in order to receive this loan, you want to lock in ten thousand worth of, USDT in BTC So basically, if you see, an offer which says, hey, this offer has fifty percent LTV ratio, that means that you will go and lock in twice as a bigger amount of BTC in collateral, and you will receive, five thousand USDT. So you will lock ten thousand worth of, BTC in collateral, and you will receive 5,000, USDT back. So LTV also works as a ratio that will show you at which point you will be liquidated or how much you have, extra, extra, I don't know, space in order, to be, sure that you won't be liquidated. So, yeah, liquidation is something that not very, not a lot of people familiar, although we were actually surprised because, you know, BitMEX is already, on the market for quite a long time and there's been always liquidation in terms of, you know, playing this BitMEX, Casino, as I would say, I, I do respect them, I'm just joking here. But in any sense, of course, we have a liquidation, any lending market has a liquidation as well. what this means, it means that if your collateral, value falling down and your LTV ratio is actually increasing, that at some point, in order to protect the lender, you will be liquidated if you won't do anything To balance your LTV ratio. Like, what are the options there? So we, currently in the first version of lending, our lending markets, we presented three options to not be liquidated, let's say. First one, you can, obviously, you can repay your loan earlier and receive back your collateral. That's one of the options. Another option, you can partially repay your loan. Let's say you took five thousand loan and you have two thousand to repay and also ba- Balance your collateral. And the third option, you can add more BTC to the escrow so the collateral volume actually increased And the LTV ratio will be decreased. So these are three options. We're going to add more options in future, like let's say you will be able to cover part of your loan paying out with BTC, that is in your collateral and partially covering with stable coins, and we will have different options as well. also the funny thing is that we send pretty, pretty, I would say we sent a lot of different notifications in order for you to, to have a time to react. If your LTV ratio is increasing and your loan, and your collateral value is falling down. So we send four different types of notification warnings that say, \"Hey, you need to do something about that,\" or you can just- wait for another notification and then do something about that. But we are, we're, we're not the fans, and we don't want to be, to face a lot of liquidations on our platform. So that's why we do the like four time, four warnings instead of two warnings, that is the standard in this industry. And, yeah, we, we want to add more flexibility in order to, so that people aren't liquidated on, on, on the Lightning platform." }, { "speaker": "stephan", "time": "27:12", "start": 1632.24, "text": "Yep. And so if we were to talk about the process then, so let's say, you know, the user has taken out a loan and the price of Bitcoin starts to tank, and now they would like to put more Bitcoin in as collateral. So what would that process look like? Would they send more Bitcoin to that same address or how would that work?" }, { "speaker": "guest_2", "time": "27:32", "start": 1652.03, "text": "You just go to the contract page, to your loan contract page, there's a button, which, which, says, like, there's There's a button which you can press and send more to the same collateral, send more BTC. So there's, as I mentioned, we've put a lot of effort in terms of UI UX And everything is on the contract page. You can go to your contract page, press the button, there's an address, you just send to this address, I don't know how much you are willing to send and add extra collateral, and, as soon as it's there, we just informed that, hey, LTV ratio been recalculated, it's now better, and you're safe to go." }, { "speaker": "stephan", "time": "28:17", "start": 1697.23, "text": "Back to the show in a moment. This show is brought to you by Unchained Capital, building Bitcoin native financial services on a foundation. of multi-signature, their multi-sig vaults are designed for ultra-secure long-term storage and have no setup or storage fees if you build them on your own. If you want the white-glove treatment, their team will teach you all about multi-signature, ship you two Trezor Model T hardware wallets, answer all of your questions, then deposit a thousand dollars of Bitcoin in your vault through their concierge service. You can buy Bitcoin through their OTC desk for purchases fifty thousand dollars or higher, straight into your new vault, which is great for self-directed Bitcoin retirement accounts and for companies moving Bitcoin To Treasury, their advanced business accounts, OTC desk, and concierge service can also help move your corporate treasury to Bitcoin, where your team controls the private keys. Check them out and enter code Livera when ordering a concierge onboarding service to get fifty dollars off. Go to Unchained Dash Capital dot com for more info. Bitcoin Black Friday is coming up on November twenty-seventh. Go to Bitcoin Black Friday dot com. It's a project from the team behind Bitcoin Magazine and the Bitcoin twenty twenty-one conference. It's a Celebration of the growing Bitcoin economy. On the site, you can find active deals for up to fifty percent off on your favorite Bitcoin gear and other merch that accept Bitcoin. It doesn't stop with spending Bitcoins though, the Fold team has teamed up with Bitcoin Black Friday to bring you a special promo for the much-awaited Bitcoin Back Card. Spend fiat and earn Bitcoin. Now, if you sign up for early access for the Fold card on Bitcoin Black Friday, you will be entered into a raffle to win a whole Bitcoin. That's right. Go to bitcoinblackfriday dot com. Right now, sign up for the Fold Bitcoin Rewards Card to enter and get a chance to win an entire Bitcoin. Now, back to the show. And also, just in terms of the warnings and the liquidation and so on, would it essentially, you know, so the syst-would the hodl-hodl system essentially send warnings to the user and say, \"Hey, you're close to liquidation, either put in more collateral or, you know, et cetera, like take some action,\" and then once it hits that level, like let's say it was a fifty percent L Once it hits that fifty, like so, let's say the Bitcoin price, you know, dropped by fifty percent, is that the point at which it would be automatically sold or how would it, or how would it work?" }, { "speaker": "guest_2", "time": "30:35", "start": 1835.02, "text": "it's, it's actually, yeah, it's actually liquidated, not at fifty percent. You need to also repay the interest of the lender, obviously, because that, that was in the agreement, and we also have a liquidation fee because, you know, that's how we want People to stimulate them not be liquidated, not paying to us extra fees. So the ULTV ratio will be shown when you're in contract or before you're, you're engaging in contract, so, and you will see at which point it will be liquidated. So it's easy, easy, it, it, it's actually pretty visible and it's easy to calculate by yourself before even engaging in a contract. So everything is described on our website. But anyway, when you are, if you're not taking any actions and you're liquidated At some point, then the, the process of liquidation started automatically because, well, we, we don't have any admin sitting there and checking your, you know, checking your, your ratio constantly, you know, we have a system deployed for that. So the process is automatically, but as soon as the liquidation is there, admin receives a notification, hey, there's a liquidation process going in that contract. He goes in, checks out whether everything is fine, whether There weren't, weren't any glitches or any bugs or anything else. And, then you have basically twenty-four hours to react. Still you have twenty-four hours to react, and you can actually, well, maybe you, you have money at that point, or maybe you can repay, and that's how it works. So basically, it's semi-automatical process. So the processing, started, starting automatically, but you still need admin approval in order to release Bitcoin in favor of the lender. And that's actually the difference between, other DeFi solutions, because they are automated and they are an, that was actually Adam's, Adam Beck, reference that he says like in other solutions you are liquidated automatically, you don't have any option to avoid that. Now with HodlHodl Lending platform, you still have some room or some place or some time to- Take some actions and not be liquidated. So," }, { "speaker": "stephan", "time": "32:58", "start": 1977.64, "text": "yeah. Yeah, of course. And, look, I guess it's, yeah, and i-i-in fairness, it's opportunities and there's risks, right? And I guess one big opportunity for, for, yeah, for a lot of people is to also not-- Well, depending on the tax laws in the country of the person, that if they are, you know, not selling the Bitcoin, then it's not a tax, tax disposal event, but then they've got to trade that off against obviously the interest rate and the" }, { "speaker": "guest_2", "time": "33:24", "start": 2004.3, "text": "Yeah, yeah, but again, we, a-as we say, and we usually say that, and we also put a lot of, you know, we're, we're trying to, to deliver this message to the community. Nobody told you that being your own bank is going to be easy, you know? You need to learn, you need to be cautious, you need to take-- We just provide you technical tools so you can be in charge and in power of your own financial flow or your own- financial assets, whether you're willing to trade them, whether you're willing to lend them, whether you're willing to borrow, we just give you the technical tools. If you want to be your own bank, be prepared, think about the risks, check out your statuses, answer on, or on any notifications or treat alerts like alerts, not just hey, I still have three more, you know, we know how the price of Bitcoin can be, you know, it can fluctuate plus- Minus ten percent per day, even more. So like, as I always say, and I always put a lot of effort on this message, like nobody told you that being your own bank is easy, you know? You wanna be in charge of your money, you wanna be in charge of your financials, take responsibility." }, { "speaker": "stephan", "time": "34:44", "start": 2083.92, "text": "Of course. I think that's a, a good, message for people to bear in mind. also in terms of risks, we should consider the risk of an underlying stablecoin failure. So, I mean, just again, a hypothetical that if, if Tether were to blow up or whatever, what, what's, what are some of the things that can be done in that case? Or if, you know, if Tether were to, you know, to be found to not have, ag- again, hypothetical, I'm not saying this, but just hypoth You know, then, would the lenders be in trouble at that point?" }, { "speaker": "guest_2", "time": "35:19", "start": 2118.81, "text": "Well, there's still collateral again, and, we still can solve this hypothetical dispute issue. Collateral is there, and, we'll be just like, you know, checking any use case separately. Of course, it will take a lot of work, but again, if the-- if we say that the value of the teaser will fall down dramatically, you're always, your price is actually tied to, to the value Yeah, it's, it's, it's the same risk with, as with any fiat. So, I mentioned in one interview, if we consider that both, altcoins and fiat are shitcoins, then, you know, it's the same risk, you know, at some point, any fiat currency, as we know, can also be devalued and your fiat loan will eventually become a pain in the ass. Sorry for my, for my bad, bad word, but Anyway, so yeah, before taking, a loan, you also need to consider a stable coin, issuer risks, you know? Like, there's, there's four options at the moment available on, on, on lending platform. There's USDT, there's USDC, there's Dai, and there's TAxus. So like, most of them are pretty liquid and available in different, in different, on different trading platforms. So you need to understand what you want To take, there's, there's, there's a risk in any of them. Like there's a risk with USDT, there's risk with Dai, with Paxos, with UST. You just need to weigh all those risks and understand which risk you're fine with and which you're not, and that's it." }, { "speaker": "stephan", "time": "36:59", "start": 2218.85, "text": "Yeah. And in terms of stablecoin selection, how were the stablecoins selected, the ones that you wanted to offer as part of HodlHodlLend?" }, { "speaker": "guest_2", "time": "37:08", "start": 2228.44, "text": "Yeah, we'll, we will definitely add more stablecoins in future, because there's- There's like, there are still few interesting stablecoins that we want to add. how we choose the first ones, well, actually, it's pretty simple, the most liquid ones and those who are represented on the big, big exchanges. Like, for example, USDT, obviously, the biggest stablecoin out there and, obviously presented on a lot of different, a lot of different centralized exchanges with huge pools of liquidity. Usually the same Impacts are the same and they also the same. So basically we just choose those who are most liquid and with a big capitalization and available in different places. So that's, that was the, simple, simple reasoning for choosing those, these ones." }, { "speaker": "stephan", "time": "38:00", "start": 2280.33, "text": "Yeah. And so thinking about the hypothetical user, what sort of, I guess that user who maybe hypothetically they have bitcoins and they wanna, you know, get some USD to be able to run their business and things, i- essentially it's on that user to go and find what exchange to actually, you know, use that if they wanted to say transfer some of that USDT into actual US dollars to be able to spend. And on things if they were gonna run an actual business with it or even for spending and so on. Yeah. I guess there, there are probably other different services that could be used in conjunction here. So an example might be liquidity, by Yuri Tagaya and the team there. Yeah. I, I, what are, what other kinds of services would you see being necessary to be used alongside HodlHodlLend?" }, { "speaker": "guest_2", "time": "38:54", "start": 2334.01, "text": "Well, we, obviously, the, the, the reason behind why we moved here That is actually we wanted to remove frictions between, lender and borrower or between two parties, because, you know, like on peer-to-peer trading platform, sometimes we see that, hey, there's a contract, there's a buyer and seller, one wants to sell, another one wants to buy, but then there's a middleman like between them, which is a bank, and then, you know, one is, one, sends, Bitcoin to an escrow, another one sends, fiat To his bank account and then at some point, I don't know, bank doesn't like this transaction or he just freezes that and, and there's a friction appears and there's a difficulties in contract, which is, which are, which are, th- these difficulties aren't, holo-holders' difficulties or any particular user, it's just there's a bank and then, and it just, it just exists. So we just, felt that we need to remove a friction between two parties, and that's why we removed the fiat. and actually we, we thought like, hey, let them, use stable coins as, like value transacting from one party to another, and then each one of them will decide which service to use on their own behalf in order to get fiat maybe or, you know, what they want to do with, with stable coins, we don't care. And, yeah, so I think along with, with the lending platform, you need to use, Trading platform as well, not all of those trading platform in particular, I'm not referring to that, but it would be great of course. But, you can use any trading platform that you want, whether it's Custodial, Non-Custodial, in order, for example, you wanna get fiat, as you explained in this use case. well, it's up to you. Then you go to any Custodial platform, whether it's KYC or whether it's less KYC, you do all the things you need to do, and you just- Just handle all these things by yourself, not like applying those risks to your counterparty, because he don't want to do this for in your favors, you know? And, that's how it works. So I, I, I think there, together with lending, there need to be some kind of trading platform, but it's up to you to decide what kind of trading platform you want to use." }, { "speaker": "stephan", "time": "41:22", "start": 2482.21, "text": "Of course, yeah. And, I guess, yeah, so I'm certainly not saying this is your responsibility to help them, but I'm just saying it's just something that That use case of, okay, so I've got my USDT, now how, how do I actually go out and get stuff with it if I need to buy things? And perhaps, you know, using some of these swapping services, things like Coin, Coin OS like that wallet, I think they can swap between Bitcoin on chain, Lightning, and Liquid or Liquid LBTC. so I wonder whether there's potentially something there or perhaps that user might then go and find somebody else who wants to buy Liquid Tethers off him and then he can, yeah, get, get re- Real world USD for that. So, I don't know, I guess it just opens up additional possibilities, but I think the Hoddle Hoddle Lend product is kind of modularizing and taking away the friction of one, leg in that journey, and then it's on the user to try and find the other legs of the journey that they need for their own purposes." }, { "speaker": "guest_2", "time": "42:23", "start": 2542.89, "text": "Yeah, because you know, we, we actually heard some- It's, it's two weeks since the launch, but we already have, heard some weird offerings like, \"Hey guys, if, if my borrow will be liquidated, will you automatically convert, the st- the Bitcoin that are in, in collateral to stable coins that he owes to me and then send stable coins to me?\" \"Well, no, we won't do that because you want to stay anonymously and obviously we don't want to touch your funds, nor stable coins, nor Bitcoin.\" So think about it, you know, again, we just provide you the technical tools and how to deal with all your cash flow, it's up to you to decide. You want to be your own bank and, that's how it works, you know? Be prepared for different types of, you know, situation out there. We will help you with providing secure escrow services. We will help you with providing technical tools with a platform that, you can use actually in order to do a peer-to-peer trade, peer-to-peer lending, whatever. But, it's up to you to decide which tools to use, how to use them, and to what extent to use them. So we won't do your job, you know, automatically converting Bitcoin to stable coins or whatever. We don't have that kind of authority. And we don't want actually to have them. And, the funny thing also why we choose stable coins, because it actually allows you to be, to be way more anonymous rather than when you are using fiat, because in the lending contract, you only share crypto addresses, like you only share stable coin address, and you only share Bitcoin address. Like if you would be using fiat, then most probably, like in any peer-to-peer trades, you would share your banking details, which To some extent, removes your anonymity. So with stablecoin, you're also actually getting extra layer of confidentiality and of anonymity." }, { "speaker": "stephan", "time": "44:28", "start": 2668.37, "text": "Yeah. And are there any thoughts in terms of, I mean, I've heard of different use cases for some of these stablecoins. I've heard in some cases, people are in countries where they have capital controls, currency controls, and they sometimes use these stablecoins as a way of reducing their exposure Potentially there will be people in, in, who are sitting in that camp or in that boat who can actually take some of those stable coins and put, you know, put them up on the platform and actually earn some return on top of just storing their, some of their value inside USDT, Tether or some other stable coin as well." }, { "speaker": "guest_2", "time": "45:05", "start": 2704.87, "text": "Yeah. well, we actually have some, liquidity providers or big lenders who, who have, a liquidity pools with stable coins and they, they just like to- With the lending platform as an opportunity to earn extra interest on their savings or on their stablecoin, liquidity pools. So, yeah, that's, that's a use case, and, and, and it's pretty obvious and a pretty popular use case." }, { "speaker": "stephan", "time": "45:33", "start": 2732.91, "text": "Yeah, for sure. so look, I mean, the platform has only just gone live, I mean, it's been what two weeks or so. Yeah. What's the feedback been so far?" }, { "speaker": "guest_2", "time": "45:42", "start": 2742.1, "text": "Well, so far I would say ninety- Eight percent very positive feedback. well, that's pretty good. And those two percent aren't bad feedback, just, feedback, on what we should add. Like there's been, some traders requested us to add this APR stuff because, you know, traders they're used to other types of ratios than people who are just using, lending platform first time or they're not using it pretty frequently, you know, for, for, Leveraging their own position. we had some requests, in terms of notification system, which a part of this request will be already covered this week. We already developed some, some extra features for proper notification. we have some requests for API, which is also in work and we're going to release an API for lending platform, in upcoming months. But so far, the, the feedback is pretty positive. But again, it's, it's a new product. Both for us and both for, for market. So we, along with our customers, were first, first, you know, first batch of users or early adopters who are just exploring the use cases and understanding what needs to be added, what needs to be removed, how to simplify the solution, because we are striving to create a simple solution, you know, not very sophisticated stuff, but just a simple lending platform which is like easy to use and it's understandable, but so far The feedback is pretty good, volume-wise and in terms of, actually numbers, they are better and we're surprised they exceeded our expectations. I won't share yet, maybe when one month is passed, we will be able to share some stats. But I would tell you, I would say one thing, twenty-four hours since launch, we already had half a million of liquidity available on, on the lending platform, which was pretty significant volume for us. Like for a new product is really significant. But anyway, we're still in, in the phase of discovery, you know, together with, with customers, together with users. And this week we are going to launch lending platform to US, so we will see." }, { "speaker": "stephan", "time": "48:04", "start": 2883.71, "text": "Awesome. So tell us a little bit about the journey, with serving US customers." }, { "speaker": "guest_2", "time": "48:09", "start": 2889.18, "text": "Yeah. So we will not, allow trading, like US trading part, because there's obviously there's Fiat and that, and, we're still not sure, we still have our own, legal preparations for that. hopefully we will allow this in, in upcoming months as well, so the trading part, which Fondo Fondo is currently also famous for, but with the lending part, again, it's non-custodial, we're not using any Fiat there, and we did our consultation, we did our legal work with that, and we're actually pretty sure that we're, we're good to go, because there's no difference with it. Between our lending platform and other lending non-custodial platforms like on top of Ethereum working on, in US. So yeah, this will be, I think, first proper launch to US market, and we're pretty excited about also because, actually the lending business in US is, is booming and most of the majority of crypto lenders, big companies are from there, like BlockFi and, and Chain. And, we see the huge market opportunity in there, and, yeah, we're pretty excited about that. I would say the same way we're excited when we were launching two weeks ago, lending, where we're at the same level of excitement in terms of launching, Hodo Hodo to US. And I'm sure we have a pretty solid loyal base of, I would say, our fans in US who are willing to use some of the Hodo Hodo products, and I'm happy to provide them with this opportunity because they have been pretty supportive. Well, if we're," }, { "speaker": "stephan", "time": "49:52", "start": 2991.6, "text": "if we are entering a bull market as everyone seems to think, I think this product will be quite a popular one." }, { "speaker": "guest_2", "time": "49:59", "start": 2999.09, "text": "I wouldn't say that, i-it's, it's probably better suitable for a bull market, I would say yes, because like obviously nobody's willing to sell, but you still need to have a liquidity, you still need to pay bills and do something like that. But it's also a pretty decent and good product for a bear market because nobody wants to sell again because the price is falling and, again, maybe you wanna, you know, buy the dip and you need some extra liquidity to buy the dip. So it's like, I think lending markets, lending and trading are suitable for any type of market out there, whether it's beer or bull, whatever." }, { "speaker": "stephan", "time": "50:39", "start": 3039.24, "text": "Yeah, and I think it's one of those things where a lot of hodlers are thinking about ways they can get more return or, get, you know, so they're thinking about, oh, okay, what about if I had a lightning node or from earning, you know, coinjoin sats from like join market or something, and maybe this is another opportunity for some of those, hodlers out there who are looking To either earn more using their stablecoins or to, with Bitcoin, you know, to get more Bitcoin and things like that. Yeah. yeah. Also, what's the, what's the thinking with, Baltic honey badger? It's a real shame we couldn't have it this year, hey?" }, { "speaker": "guest_2", "time": "51:12", "start": 3071.76, "text": "Yeah, but, you know, obviously there's a reason for that." }, { "speaker": "guest_2", "time": "51:18", "start": 3077.63, "text": "as, as we see, and, I hope that, the, the, this, pretty dramatic and pretty bad situation with the health, globally, you know, with Corona and all that stuff will, will resolve at some point. honestly, we, we would be able, w-we would be able to do a virtual conference this year, but I'm not a fan, actually, of virtual experience. I just think it's, it's different. not the same. So we are, like, we're hoping that we will be able, and we are ready to organize the Honeybeard 2021. But again, it's, it's not only up to us, you know? It's, it's also up to, up to how the situation with coronavirus will evolve eventually. But yeah, we have plans and, we want to organize the Baltic Honeybeard 2021. thinking about it, we already have all Preliminary agreements there, but we will see, yeah. If, if the situation will be good, then we will organize that definitely." }, { "speaker": "stephan", "time": "52:24", "start": 3143.67, "text": "Yeah, that'll be great to see. Hopefully, it is back on, next year. Yeah, I, I, yeah, I think it's, it's just a, I agree with you though that, the virtual events just aren't the same, as being able to meet everyone in person. So for any listeners out there who haven't been able to make it to one, if it's on next" }, { "speaker": "guest_2", "time": "52:46", "start": 3166.31, "text": "A-actually, Australians, Bitcoiners, said to me, \"It's, like yearly pilgrimage of, Bitcoiners from all the world to Multicoin, basically, you know?\" And we're actually happy that we, we've managed to create such a cool event, and we're enjoying it by ourselves, but, yeah, it, it, this time it's not only about us, you know, it's also about the situation in the world, unfortunately." }, { "speaker": "stephan", "time": "53:13", "start": 3192.67, "text": "Of course. Yeah, sure, sure. look, I think the other key- Thanks. anything else from your end, in terms of hodl, hodl and, things going on, on your end?" }, { "speaker": "guest_2", "time": "53:23", "start": 3202.61, "text": "Well, yeah, basically we are going to shape our lending platform in the coming months, you know, adding more features. So we have a roadmap of that, so, so the platform will be more and more user friendly from, I think, on a weekly basis we will roll out something new, if something small features or big features that will, I don't know, help you With the platform and will, increase your level of happiness when you're engaging with it. But, we're also not forgetting about the Hodo Hodo trading platform. We're still, in a process of redesigning it. Hopefully this year we'll be able to complete that because we also simplified, pretty extensively simplified Hodo Hodo trading part. we also are doing our, as I mentioned, I was doing our homework and legal work in order to- To allow US markets, and US users to use the trading part as well. And we also have a third, piece of the puzzle, with our, within our ecosystem, which is, which is our prediction markets. we did launch it like more than a year ago. we didn't put a lot of effort to that, honestly, but we actually it allow us to, make a proper market research and it's going to be redesigned as well. We're going to release a new version of prediction markets, I think, during twenty twenty-one. So yeah, these are basically main plans for our future, you know, shaping our products and making them way more better, way more user-friendly than they are now." }, { "speaker": "stephan", "time": "55:02", "start": 3301.64, "text": "Fantastic. Well, that sounds great. listeners, make sure you go and check out HoddleHoddle. That website is hoddlehoddle dot com and follow Max. His Twitter handle is Keidun M. Obviously, the links will be in the show notes. Max, thank you again for joining me on the show today." }, { "speaker": "guest_2", "time": "55:17", "start": 3317.07, "text": "Stephan, thank you very much. I enjoyed the show. Hope you, you enjoyed as well. And thank you very much." }, { "speaker": "stephan", "time": "55:26", "start": 3325.59, "text": "Make sure you subscribe to the show using your podcatcher application. I've got an interesting debate coming up with Robert Breedlove and Jesse LaLaurie. Thanks, and I'll see you in the citadels." } ] }