Hey Stacker News,
For long term Bitcoin holders, there’s a new income opportunity: lending your Bitcoin ETF shares to short sellers via Bitcoin Floating Rate Notes from Encrypted Energy.
Professional traders, such as market makers and hedge funds, are constantly seeking to sell short Bitcoin—either for the purpose of arbitraging the premium of a particular ETF's market price to its Net Asset Value, to hedge long exposure risk, or to make directional bets on the market. However, for each of the 7+ and counting Bitcoin ETFs, the borrowing demand varies, often changing daily. That’s an opportunity for you—and Encrypted Energy—to rotate your capital in and out of the most in-demand ETFs over time, earning fees for lending your shares.
The beauty of investing in our Bitcoin Floating Rate Notes is twofold:
- Lower custodial fees. If the borrowing interest rates yield more than the ~0.30% annualized expense ratios charged by ETFs, you’re getting a professional custodian for low or no cost, potentially even getting paid.
- Reflexive scarcity. What’s a Bitcoin holder to do with new income? Invest it again in Bitcoin of course, thereby further contributing to its scarcity and increased price, rinse-repeat.
Why use a Floating Rate Note?
We don’t guarantee performance. Yields may vary anywhere from 0-10%+ APY at any point. We’ll simply invest your Bitcoin collateral in highest yielding Bitcoin ETF and then pass along any variable income to you, directly in spot Bitcoin via the Lightning Network.
Have questions or feedback? I’d love to hear from you. Reply to this email and I’ll get back to you.
Best regards,
John
FAQ
How’s this different from Celsius, BlockFi, Three Arrows Capital, etc?
Short sellers borrowing shares from FINRA-regulated Broker-Dealers, such as Fidelity, E*Trade, Charles Schwab, Interactive Brokers, and Ally Bank, are normally required by the broker to post collateral in their account equal to at least 100% their trade value. The broker then takes that collateral and places it in a third-party custodian bank on your behalf. In other words, the trades are fully collateralized. And in the unlikely insolvency event of the broker, the collateral is available at the third-party custodian for you redeem.
How is the Note principal paid?
Notes will be funded using spot Bitcoin, either on-chain or via the Lightning Network.
How often will interest payments occur?
If any interest income is available to be paid, payments will occur monthly.
Is anyone eligible to invest?
We are accepting only accredited investors, institutional investors, or corporate treasuries at this point in time.