Hello fellow Badger community!
We wanted to introduce ourselves to the Badger ecosystem as fans of the upcoming eBTC protocol launching SoonTM. Steakhouse ₿inancial, is the only crypto-native CFO-as-a-service company for DAOs, and we specialize in stablecoins. It’s where our backgrounds are from – our team met as contributors to the Strategic Finance Core Unit at MakerDAO and we’ve been obsessed with stablecoins ever since. eBTC is a new type of stablecoin, indexed to a novel type of hard asset and has with it enormous potential.
Like all stablecoins, eBTC looks like a balance sheet and understanding balance sheets will help massively with understanding how to set protocol parameters. We wrote an Operating Manual for Decentralized Stablecoins that we hope some of you will take the time to read and give us your thoughts on! We wanted to share some views on how we thought about eBTC and introduce our team to the community.
Welcome to the future of financialized Bitcoin with eBTC
We believe that smart-contract powered stablecoins are a powerful financial primitive with enormous potential to create transparent, flexible money accessible to all. We also believe in the potential of Bitcoin as an autonomous base-money on which a new, fairer, financial system can be created. Combined, stablecoins can offer the financialization and flexibility of smart-contract stablecoins like Dai with the hardness of the world’s new digital reserve asset, Bitcoin.
CDP mechanisms are a useful first step to get the balance sheet started. Basing eBTC on stETH is an inspired first step, offering a way for leverage seekers to target the ETH/BTC pair with directional views, or simply just hold both stETH and eBTC as part of a diversified portfolio. The next step, in our view, is to grow eBTC utility throughout the DeFi ecosystem and take advantage of the ability to natively issue BTC denominated liabilities on-tap through direct minting integrations with money markets and other protocols. The final boss is integration with BTC proper, which will require ongoing development to get right in a trustless way.
Combined, this is a roadmap for a usable unit of account in BTC terms, a eurodollar Bitcoin (eurobitcoin?) deposit on Ethereum, the world’s largest decentralized programmable settlement layer.
Managing Assets and Liabilities for a Bitcoin stablecoin
Asset-Liability Management are the tools and processes for optimizing the balance sheet to maximize a token holder objective while always meeting solvency and liquidity requirements. The first step, as a CDP-based stablecoin, will be almost entirely about maximizing the liquidity of the token and finding ways to give it natural utility. The two initial levers of demand for eBTC will be
- Leverage seekers looking to take a view on the ETH/BTC pair
- Ethereum-based BTC hodlers looking for a decentralized alternative to WBTC
To avoid knocking the stablecoin off peg, it’s important to have a balance between the demand for borrowing and the demand for holding eBTC. This will mean keeping an active eye on the protocol yield share and its interaction with minting demand. Driving liquidity for the eBTC/WBTC pair will be paramount to help bootstrap trading volume between eBTC and other applications. The Steakhouse team will be contributing actively to all of the above, as well as advocating for eBTC across DeFi and beyond.
What can Steakhouse bring to eBTC?
We have deep experience in bringing a crypto-native financial perspective to protocol design. We contribute to Lido DAO as the Finance workstream and actively manage institutional onboarding, liquidity research and design and other financial topics of relevance to the protocol such as surplus parameters. We are an ecosystem actor for MakerDAO under the Launch Fund, where we help token holders structure, underwrite and manage almost $3bn in real-world asset collateral. We helped repeg VAI, the Venus Protocol stablecoin, in under three months by recommending the deployment of a USDT PSM and raising borrowing rates. We are shortly launching a MetaMorpho Vault focused on tokenized Real-World Assets for USDC lenders. We contribute to other projects across DeFi and we aim to contribute to projects that we firmly believe will have a meaningful impact on the world to bring open and transparent finance to all non-US human beings on the planet.
Our proudest Bitcoin-related achievement to date is that no less than two (1, 2) out of three of our co-founders have been blocked on Twitter by Juergen Schaff, the central banker at the European Central Bank who wrote “Bitcoin’s Last Stand” in November 2022. This fanfic report, laced with deep-seated Freudian projection, has not stood the test of time.
What else is cooking in Badger
Over the past few months at Badger, we’ve been busy working on advising on finance operations, helping develop a 2024 Badget and collaborating on creating the go-to-market seeding and risk strategy for eBTC. We’re passionate about bringing new utility to Bitcoin through the power of smart-contract powered decentralized stablecoins. There is a lot of opportunity to make a winning product for a lot of people looking to use BTC on a regular basis. We have a large centralized WBTC to dethrone. There is lots of work to be done. Throughout, we will help with Dune dashboards, transparency and lots of steaks. Look forward to engaging with the community on the forums and in the sett.