Introducing Lambda Finance: A New Bitcoin-Based USD Stablecoin Protocol

The BTC ETF was approved three months ago, and following last week’s Bitcoin halving, the Runes Protocol is now attracting more attention and participants to the Bitcoin ecosystem, potentially driving it to new highs. As capital inflows increase, driven by both institutional and individual investors, the development of new infrastructure is being catalyzed.

Despite Bitcoin’s significant market presence, the DeFi sector struggles to leverage its liquidity effectively. Current L2 and Bitcoin DeFi platforms are nascent, primarily focusing on connectivity challenges, with most DeFi protocols catering to ERC-20 assets. Efforts to integrate Bitcoin into these applications are limited. A promising development in this area is the exploration of BTC stablecoins, aiming to enhance liquidity in the Bitcoin ecosystem. We will soon introduce a new BTC stablecoin project — @LambdaFinance.

Project Introduction

Lambda Finance is a bitcoin-based USD stablecoin protocol that transforms bitcoin’s potential liquidity into a combinable and capital-efficient stablecoin, btcUSD, that enables holders to realize the revenue opportunities of DeFi. Users can mint the btcUSD stablecoin with their bitcoins and convert it to underlying collateral at any time at a 1:1 ratio. btcUSD is fully backed by an overcollateralized debt position and employs a soft liquidation mechanism to protect the user’s assets.

Investment and Team Information:

The Lambda Finance has completed its angel round, raising $1.8 million, with Michael Egorov, founder of Curve, the Hashcow Group @aladdinDAO, and @bambalados from the @conflux_network and @bitcoin_square_ is also a strategic investor in this project! The team has a lot of experience, including the Founder of Curve Finance, who is both an investor and advisor to the project.

Technical Details

btcUSD is the first permissioned fork version of crvUSD from Curve Finance, inheriting all the innovative features and competitive advantages of crvUSD. It incorporates the following characteristics:

  1. 1. Soft Liquidations: When the price of Bitcoin drops, Lambda Finance gradually sells collateral to reduce risk and replenishes collateral when the Bitcoin price recovers, ensuring the system’s solvency at all times.
  2. 2. Autonomous Market Operators: Lambda Finance has the ability to mint and burn btcUSD in the liquidity pool to adjust its peg to the US dollar, earning fees for liquidity providers through this process.

3. Adaptive Interest Rates: Real-time adjustment of borrowing interest rates to influence supply and demand dynamics, maintaining stability of its currency unit pegged to 1 US dollar.

Product features

  1. Highly Resilient: Anchored defense mechanism that adapts and responds to market conditions in real time; no need to wait to de-anchor in order to react; no forced closure + mass liquidation + collateralization + debt redistribution; no need for slow governance of voting rates. Achieves dynamic equilibrium and will remain stable anchored near $1.
  2. Minimal Liquidation Risk: Bitcoin holders use their assets to borrow and lend with the goal of going long Bitcoin and using its liquidity for various transactions. However, current liquidation models work against this fundamental goal. With the soft clearing mechanism provided by L.L.A.M.M.A, users can securely collateralize and leverage without worrying about liquidation risk due to short-term volatility.
  3. Self Sovereign: Users have full control over their collateral. The exchange ratio is 1:1 and users can withdraw funds at any time. btcUSD only accepts Bitcoin equivalents as collateral, eliminating the external risk associated with ERC-20 or real-asset-backed stablecoins. At launch, Lambda will support $wBTC and $tBTC from @TheTNetwork, with plans to integrate @dlc_link‘s dlcBTC, as well as other bridging derivatives and liquid collateralized BTC, to create revenue-supporting lending options for BTC holders.

Summary

As the team says, “Bring Degen Back to Defi” is ready, the Bitcoin ecosystem is here, and the most exciting thing about Lambda Finance is the release of the new Defi primitive. This primitive will enable ANY protocol to instantly create a volatile | stable pair and a lending market for their token in one fell swoop. Stay tuned for more details on the future of this project as we embrace the thriving Bitcoin ecosystem.