🍡Multi-Collateral

How We Accept (Almost) Anything

Traditional CDPs treat crypto like a strict librarian—only “blue-chip” assets allowed. But crypto’s power lies in its diversity: memecoins fuel communities, AI tokens drive innovation, and RWAs bridge real-world value. The problem? Volatility and complexity scare most protocols away.

The Solution:

Bit Protocol embraces all assets by deploying a four-layered safety net, transforming risk management into an enabler, not a barrier:

1 | Risk Isolation Vaults

Each collateral type lives in its own smart contract “compartment.” Think of it like a submarine’s bulkheads: if one compartment floods (e.g., a memecoin crashes), the rest stay dry.

• How It Works:

  • ETH, BTC, and stablecoins have their own vaults.

  • Memecoins, AI tokens, and RWAs get isolated silos with custom rules (e.g., lower loan-to-value ratios).

• Why It Matters:

  • A $DOGE meltdown won’t impact ETH borrowers.

  • Chains can list niche assets without endangering their ecosystem.

2 | Stability Pools

Every collateral is backed by the Stability Pool filled with $BitUSD, acting as a first responder during crashes.

• How It Works:

  • When a vault is liquidated, the pool buys its collateral at a discount (e.g., $PEPE at 10% below market price).

  • Liquidity providers (LPs) earn arbitrage profits and fees—like scavenging treasure from shipwrecks.

• Why It’s Revolutionary:

  • Liquidations become profitable, attracting LPs instead of causing panic.

  • Volatile assets get a built-in buyer of last resort.

3 | BIT Token Staking

Inspired by Aave’s Safety Modules but supercharged, BIT stakers act as the protocol’s “financial firefighters.”

• How It Works:

  • Users stake BIT tokens into a shared safety pool.

  • If a collateral’s liquidation fails (e.g., a flash crash leaves debt undercollateralized), staked BIT is sold to cover gaps.

• Rewards for Heroes:

  • Stakers earn a cut of protocol fees (paid in $BitUSD) for their courage—like earning interest for insuring a skyscraper.

4 | On-Chain Insurance _{(Powered by Atomica.org)}

For assets with extreme volatility (memecoins) or real-world assets (RWAs), we add decentralized insurance.

• How It Works:

  • Borrowers pay a small fee (e.g., 0.5% of collateral value) to Atomica.org’s risk pools.

  • If their collateral implodes, Atomica’s underwriters cover the loss.

  • Assets can be added permissionlessly if they include insurance to protect the protocol

• Real-World Example:

  • A farmer deposits tokenized wheat futures (RWA). If drought destroys the crop, Atomica reimburses the protocol, and the farmer’s debt is forgiven. The insurance service is live and operational at insurance.landx.fi.