So, its been a while since the last one. Truth is, I wasn't sure for a long time which crypto narrative would prove the dominant one for the current cycle; whether it be AI related stuff, or CDP (Collateral Debt Position) protocols, or something else. CDP you say? Isn't AAVE, Curve & Compound old news at this point? Well, yes and no. I've found an absolute Gem imo, and for once I was early on it, as you will be, if you consider the info dump I'm about to throw out there.
In short, the AI narrative proved underwhelming at least until this point, not to mention it was also filled with scams taking advantage of the narrative (HarambeAI Token anyone?!). So, I decided to focus on CDP-Lending style protos, although they might be also one of the most confusing to understand from a newbie point of view. Well, there becomes a point in every DeFI enthusiast's life where new, confusing tech will have to be understood in order to make money. Which is the most important thing after all for you readers, I'd imagine. Don't worry, I'll be posting strategies and technical details in a way anyone can understand and make use of.
CDP-Lending Protocols
As you might have noticed, CDP:s and lending platforms are coming out of the woodworks left and right, everyone wanting to capture the audience and userbase for their protocol alone. And that's fine, if you want to just get by. If you want to make some serious financial moves with rigorous upside potential now and in the future, you've come to the right place.
Most of you can probably remember Vine Money, the basic lending protocol with huge fees and emissions especially at launch. That turned out to be a huge disappointment, especially from a technical side of things. The team could not, or were not able to build the smart contracts and backend functionality safely and securely, and as such it was littered with bugs right from the start. Shortly after launch, users were becoming disillusioned with lack of progress and empty promises. By May 2024, everyone thought Vine was dead and buried.
Imagine my shock when I discovered Vine was being sold, rebranded, and built from scratch with new contracts and frontend, by none other than employees from the famed Protofire - a company with impressive feats under their belts too numerous to list here, but which include tech integrations for big names such as MakerDAO, Gnosis Safe and many others. The full list can be found on their website.
I instantly thought that if some team could salvage Vine and recreate it as something totally evolved from the original protocol, it was Protofire. And of course they have full support and backing from Oasis.
The New Project - Bit Protocol
Bit Protocol is the given name for the new protocol. I'd imagine it has much to do with $bitUSD, the privacy-based stablecoin feature they provide. The privacy aspect comes from using Oasis Sapphire Privacy Layer mechanics, and Bit Protocol will be launched before the end of year according to their Telegram. This opportune timing can't be a coincidence - Oasis Ecosystem has been launching new projects, such as the new DEX Neby, at the same time. So I'd imagine that's one option for a main dex to use with BP; Illuminex has a dex as well, but that's being phased out at least partly in my understanding, and now works only in the deprecated v1 version of their app. I don't want to get bogged down in details or speculation about this, as BitProto released a Medium article detailing the Launch and future plans for their product.
New features, collaterals & use cases
You can read in their Medium the strategy for launching the protocol in multiple phases, so you can read that yourself. I wanted to focus on some things mentioned there that really peaked my interest. Some of these were:
- v2 - Multichain compatibility, with cutting-edge tech being used to facilitate it
- Hackathon win provides funding for integrating zkBTC - a BTC Layer 2 utilizing zkEVM
- Exotic Collaterals like meme coins, with measures to reduce liquidation risk like stricter LTV Ratios on these coins
- Yet to be released secrets "that could revolutionize lending protocols"
- Flash loans, for looped lending and thus utilizing leverage on your position
Privacy-enthusiasts will also be glad to know that in the future, multichain swaps could essentially be made private utilizing Oasis Privacy Layer in the middle of a swapping process. Bit Protocol will be fully compliant however, to reduce bad actors taking advantage of the protocol.
Conclusion
Wait, what about the strategies for maximum yield? Well, that's for next week's article. I hope to lurk in their Telegram and gather additional info, although for now, of all the CDP Protocols, this seems most promising by far, and not only because they have a team that has a proven track record specializing in projects that have high potential and making good on that potential. No other protocols have promised the features Bit Protocol has, and I trust the team enough to recommend checking them out.
Next week: how to leverage your positions in multi-collateral lending and other fun stuff.
