🆕Concepts
1. Collateralized Debt Position (CDP)
It's a digital vault where you lock crypto assets (like ETH or memecoins) to borrow $BitUSD stablecoin.
How it works:
Deposit collateral (e.g., $100 in ETH).
Borrow $BitUSD (e.g., up to $75, maintaining 133% collateral ratio).
Repay $BitUSD + fees to unlock your collateral.
Why it matters:
Turns idle assets into liquidity without selling.
Analogy: Like a crypto pawn shop—leave assets, get cash.
2. $BitUSD Stablecoin
A decentralized stablecoin pegged to $1 USD, backed by overcollateralized crypto assets over different chains.
Key features:
Cross-Chain Native: Moves between chains (Ethereum → Polygon) without bridges.
Decentralized: No company controls it—governed by BIT token holders.
Overcollateralized: Always backed by >150% worth of crypto assets.
Why it matters:
Stable spending/saving in volatile markets.
Analogy: A global dollar that lives natively on every blockchain.
3. Multi-Collateral Support
Ability to borrow against diverse category of assets—not just "blue-chip" tokens or blockchain native tokens.
Why it matters:
Borrow against niche assets others reject.
Analogy: A bank that accepts rare art as collateral.
4. Risk Isolation
Safeguards that prevent one failing asset from crashing the whole system.
Layers of protection:
Asset Vaults: Each collateral type (e.g., memecoins) has separate vaults.
Chain Silos: Problems on Ethereum don’t affect Polygon users.
Backstop Pools: Emergency funds for each asset
Why it matters:
Lets volatile assets coexist safely.
Analogy: Firewalls between ship compartments—one leak won’t sink the vessel.
5. Liquidations
Automatic safety process when collateral value drops too low.
How it works:
Collateral value falls below 110% of borrowed amount.
Backstop Pools buy collateral at a 5-10% discount.
If pools can’t cover, BIT stakers step in.
Avoiding liquidation:
Monitor positions with built-in alerts.
Top up collateral during market dips.
Why it matters:
Protects the protocol’s solvency.
Analogy: Airbags deploying in a crash—minimizes damage.
6. BIT Token & Governance
BIT is the protocol’s governance token.
Key uses:
Voting: Decide which assets to add, fee changes, or upgrades.
Staking: Earn 30-60% of protocol fees by securing the network.
Insurance: Staked BIT backs high-risk assets (slashed only if they fail).
Why it matters:
Users control the protocol’s future.
Analogy: Shareholder voting in a community-owned bank.
8. Backstop Liquidity Pools
User-funded safety nets for liquidations.
How it works:
Users deposit $BitUSD into asset-specific pools (e.g., "Memecoin Pool").
During liquidations, the pool buys collateral at a discount.
LPs earn fees + discounted assets.
Risk/Reward:
Rewards: High APY from fees + arbitrage profits.
Risks: Temporary losses if collateral crashes severely (rare).
Why it matters:
Turns liquidations into profit opportunities.
Analogy: Buying fire-damaged goods at auction to resell later.
9. On-Chain Insurance
Optional coverage for high-risk collateral (e.g., RWAs).
How it works:
Borrower pays 0.5-2% fee (e.g., $5/year per $1,000 collateral).
If asset fails catastrophically (e.g., RWA defaults), insurance covers losses.
Powered by decentralized underwriters like Atomica.org.
Why it matters:
Borrow against exotic assets with confidence.
Analogy: Crypto insurance for "uninsurable" risks
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