In its ongoing journey to reshape the crypto investing
landscape, Struct Finance, a DeFi platform that enables investors to engage
with tailored interest rate products linked to digital assets, is thrilled to
announce the launch of the BTC.B-USDC Vaults.
The tranche-based BTC.B-USDC Interest Rate Product was made
possible by effectively leveraging Avalanche’s BTC.B (Bridged Bitcoin) for DeFi
applications. The new vault beautifully complements Struct Finance’s Genesis
USDC Vaults, heralding an exciting era in DeFi yield opportunities. Struct
Finance built the new vault on top of GMX’s Liquidity Provider Token (GLP) to
generate predictable yields for BTC in the form of fixed returns, and USDC in
the form of variable returns, while still leveraging a secure asset and
minimizing volatility and exposure to other risks.
“Our BTC.B-USDC Vaults represent an innovative application
of Bitcoin in DeFi. We’re taking full advantage of Avalanche’s Bridged Bitcoin
(BTC.B) to bring about a fresh wave of opportunities in the digital asset
space,” said Ersin Dalkali, the Co-founder of Struct Finance.
While Bitcoin continues to dominate the market, its
inherent lack of a DeFi layer has traditionally made native yield generation
quite challenging. Avalanche has unlocked new possibilities for Bitcoin in DeFi
with BTC.B (Bridged Bitcoin). Unlike WBTC that relied on centralized bridges,
BTC.B is minted via Avalanche Core — a decentralized bridge — and can be
trustlessly bridged across networks using the Layer Zero bridge.
At present, Bitcoin investments in prominent lending pools
yield between 0.2–0.5%. Even the stable swap pools offering wBTC-BTC.B products
only manage to deliver returns of about 2%. Struct’s BTC.B-USDC product
shatters these limitations, offering significantly higher yields.
The purpose of BTC.B is to empower 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
6000 BTC bridged and a fully diluted value of $180 million, BTC.B is carving a
niche for itself in the crypto arena.
The Bitcoin ETF applications by BlackRock, WisdomTree, and
Invesco – three of the world’s leading asset managers – are not just a mere
submission. It is a signal that the traditional financial realm is ready to
embrace Bitcoin on a new level. Recently, the US Securities and Exchange
Commission (SEC) gave the green light to a 2X leveraged Bitcoin ETF, sparking
an enthusiastic wave of speculation and anticipation for approval of a spot
Bitcoin ETF.
Delta hedging
Amid the highly volatile crypto industry, Struct Finance’s
Interest Rate Products allow anyone to split and repackage the risk of any yield-bearing
DeFi assets in different parts to fit their risk profile through an innovative
process called “tranching.” Every Interest Rate Product is a single vault split
into two portions, or tranches that have different return configurations:
1. A Fixed-return Tranche for conservative investors looking
for consistent returns
2. A Variable-return Tranche for investors with a higher risk
appetite seeking superior returns
The yield from the underlying asset flows into the fixed
tranche first to ensure predictable returns. The remainder is then allocated to
the variable tranche, which gets enhanced exposure to the underlying
yield-bearing asset. Compared to the fixed tranche, the variable tranche might
accrue more yield, less yield, or no yield.
As part of its BTC.B-USDC Vaults, Struct Finance has
implemented a unique approach to managing investment risk: delta hedging. While
the fixed tranche takes center stage with its high yield, the variable side of
the product offers an additional layer of intriguing complexity and potential.
Upon deployment of funds into the vault, the BTC.B in the
fixed tranche gets converted into GMX’s GLP token, setting up a position that’s
short Bitcoin against GLP and contributing a negative delta. In contrast, the
USDC on the variable side is converted into GLP, which inherently carries a
positive delta.
This innovative delta-hedged product design achieves a fine
balance between the positive and negative delta forces. It results in a robust
strategy that allows investors to confidently navigate the crypto market’s
inherent volatility.
This artful interplay of the fixed and variable sides
within the vaults opens the doors for investors to tap into the potential of
Bitcoin investments like never before. By catering to a diverse range of 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 (https://www.struct.fi/) is at the forefront
of the DeFi revolution, with a vision to transform the design and utility of
financial products. It empowers users to design their own financial
instruments, harnessing the power of tokenized, yield-bearing positions to
unlock a world of diverse investment opportunities. Moreover, its cutting-edge
financial products adopt a tranche-based system, smartly distributing yield
between different investor classes. This balanced approach guarantees a steady
yield for risk-averse investors while also offering the prospect of heightened
returns to the more adventurous. Initially available on Avalanche, Struct
Finance plans to go multichain in the near future.
Disclaimer: This release is for informational purposes only
and should not be construed as financial promotion.