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[What is the Bedrock Yield Vault, and is the tri-party credit structure the solution to unlocking Bitcoin yields?]
I just wrapped up my research on the upcoming first vault strategy (Yield Vault) in the Bedrock @Bedrock 2.0 plan, and honestly, after looking it over, I doubt it'll have a positive impact on the $BR price.
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What is the Bedrock Yield Vault?
In simple terms, Bedrock will use the Cap Protocol as a guarantor on the platform, earning interest from borrowers, while Bedrock users' uniBTC acts as the collateral for this guarantor role.
This tri-party credit structure may seem a bit complex at first glance, but the principle is pretty straightforward.
Take the Bedrock Yield Vault as an example: there’s a group of institutional borrowers in need of funds (Susquehanna, Amber, Flowdesk, Selini) who plan to borrow USDC from Cap to run investment strategies.
As the guarantor for these borrowers, Bedrock will assess the counterparty risks and credit evaluations of these institutional borrowers, then provide collateral, which is uniBTC serving as collateral for the loans. If the borrower defaults, those uniBTC will be liquidated.
However, as the guarantor, Bedrock also takes on the default risk, while collecting interest from these borrowers as income. This creates what Bedrock refers to as: a source for activating $BTC assets to earn reliable yields.
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Essentially, this does differ from the peer-to-peer model used by retail investors on DeFi, adding a layer similar to the role of an underwriter in traditional insurance companies.
Bedrock's emphasis on institutional-grade yields is not an exaggeration, as the counterparties are institutional-grade capital vetted by Cap, while Bedrock, as the underwriter, will select trading partners that match its risk profile.
From Bedrock's perspective, it opens up opportunities for retail investors to connect with institutional capital and ensures that uniBTC users are protected from counterparty risks.
But at this current moment, with DeFi incidents happening frequently, how many existing users or funds are willing to accept the complex, multi-layered risks, including: the protocol risks of Bedrock or Cap, borrower credit risks, token risks, etc.? I really find it hard to say.
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● The above content does not constitute investment advice (NFA); users should operate according to their own risk tolerance, and DYOR before participating in the investment market.
● Attached image sourced from Cap
#Bedrock #CAP #BR
I just wrapped up my research on the upcoming first vault strategy (Yield Vault) in the Bedrock @Bedrock 2.0 plan, and honestly, after looking it over, I doubt it'll have a positive impact on the $BR price.
-
What is the Bedrock Yield Vault?
In simple terms, Bedrock will use the Cap Protocol as a guarantor on the platform, earning interest from borrowers, while Bedrock users' uniBTC acts as the collateral for this guarantor role.
This tri-party credit structure may seem a bit complex at first glance, but the principle is pretty straightforward.
Take the Bedrock Yield Vault as an example: there’s a group of institutional borrowers in need of funds (Susquehanna, Amber, Flowdesk, Selini) who plan to borrow USDC from Cap to run investment strategies.
As the guarantor for these borrowers, Bedrock will assess the counterparty risks and credit evaluations of these institutional borrowers, then provide collateral, which is uniBTC serving as collateral for the loans. If the borrower defaults, those uniBTC will be liquidated.
However, as the guarantor, Bedrock also takes on the default risk, while collecting interest from these borrowers as income. This creates what Bedrock refers to as: a source for activating $BTC assets to earn reliable yields.
-
Essentially, this does differ from the peer-to-peer model used by retail investors on DeFi, adding a layer similar to the role of an underwriter in traditional insurance companies.
Bedrock's emphasis on institutional-grade yields is not an exaggeration, as the counterparties are institutional-grade capital vetted by Cap, while Bedrock, as the underwriter, will select trading partners that match its risk profile.
From Bedrock's perspective, it opens up opportunities for retail investors to connect with institutional capital and ensures that uniBTC users are protected from counterparty risks.
But at this current moment, with DeFi incidents happening frequently, how many existing users or funds are willing to accept the complex, multi-layered risks, including: the protocol risks of Bedrock or Cap, borrower credit risks, token risks, etc.? I really find it hard to say.
-
● The above content does not constitute investment advice (NFA); users should operate according to their own risk tolerance, and DYOR before participating in the investment market.
● Attached image sourced from Cap
#Bedrock #CAP #BR
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