Speaker 2: Welcome to the Honest Money Show a big thanks to our sponsor.
Shop Bitcoin Australia for making today's episode possible.
Anja: Greetings.
Joining me today is Philipp from Lendasat.
Philipp is a CEO and co-founder of this platform that offers Bitcoin backed loans.
So essentially it's an online marketplace connecting lenders and borrowers.
Uh, they provide the platform, they charge a small fee, and they basically
ensure that everything, um, runs smoothly between the two players.
Welcome to Honest Money Field.
Philipp: Hey Anja.
Thanks for having me.
Anja: Yay.
Um, so before we dive into, um, this, you know, talking about your platform,
I did wanna take the moment to educate users or listeners I should say, on
just a little bit just about Bitcoin backed lending in general and what
some of the terminology, um, would need to be that they're aware of.
Because we're gonna be talking about these things throughout the podcast and
if they kind of have an understanding upfront might help, uh, smooth out that.
So the first thing is the loan to value.
Um, this, I guess people are already familiar with because it's used in
real estate as well, but do you wanna maybe explain it in your words very
simply what l loan to value LTV is.
Philipp: Totally, totally.
Maybe even take one step back.
What is a Bitcoin backed loan?
I mean, as the, the term already implies it is a loan against your Bitcoin.
So you put up Bitcoin as a collateral, and then in return you receive
cash or stable coins as a loan.
Uh, the LTV, the loan to value ratio is the ratio between the amount you borrowed,
plus the outstanding interest, like how much you really owe to the lender.
Divided by the value of your collateral.
So let's say you take a hundred K loan you own, you owe 10% interest,
so 110 K is outstanding and then you put up 220 K worth of Bitcoin.
Then your LTV is 50%, 110 divided by 220 is 50%.
Anja: Great.
And this one is going to be an easy one.
Loan term essentially is the length of time the loan is active
until it must be repaid easy one.
Interest rate.
Um, the cost of borrowing usually expressed as an annual percentage,
but maybe do you wanna talk about how that works on your platform?
Philipp: Yes.
So there are two different ways of how interest rates can work.
Um, the first one is you have bullet loans where you pay back the whole interest
at maturity of your contract, meaning when the contract expires, you pay back
the amount you borrowed, plus interest.
So if you took a hundred k loan at a 10% for one year, you have to pay back
at the end of the loan, 110 k. If the, there's another option, which is, we
call it an interest only loan, where you have monthly installments to only pay
back the interest, and then at maturity you pay back the, the remaining amount,
meaning for this a hundred K loan you pay.
Math is not correct, but around 1000 every month.
And then at the end of the year, you pay back the remaining.
Anja: Cool.
I did not know that.
That's awesome.
Um, and then this is another easy one, collateral.
So I like how in your, uh, FAQs on your website, you explain that this
is just like pawning some gold.
You know, if you have a gold watch and you wanna put that down as,
as, as collateral, you can do that.
This is just a digital version with Bitcoin, um, being used as collateral.
Um, excellent important one.
Margin call or the liquid liquidation threshold, the point
in which lend the lender may require you to put more collateral.
And I know this is a very big topic.
Do you wanna talk about liquidation?
Philipp: Rather not.
No.
Just kidding.
Um, yes, that's a very, very important one.
Um, so related to the LTV, the loan to value ratio, you have to keep a
certain threshold of your LTV at all times to prevent getting liquidated.
Uh.
And that depends completely on the different platforms.
On our platform, usually you start off with a 50% LTV, meaning you over
collateralized by twice by two x.
So for a hundred K loan you have to put up 200 K worth of Bitcoin.
And then the the margin call or the.
Um, the thresholds you have to look out for is if the Bitcoin price price
drops by a certain percentage, then you might get a margin call, and that's
first, that's before you get liquidated.
So on our platform, we have a margin call at 80% LTV.
So if the price drops by roughly 35 to 40%, then you are at 80% LTV.
You get an email and if you have a telegram.
Connect, uh, telegram pod activated, you get a telegram notification
saying, Hey, please consider topping up your collateral.
And then we have a second margin call at 85%.
So if the price drops by roughly another 5%, you get another warning
saying, Hey, it's very critical.
You are close to getting liquidated and then at 90% you
can get liquidated by the lender.
Anja: Yeah.
Yeah.
And that's it.
That's very important to understand.
So, um, I guess the last one I've got on my list here is also the
custody or the control model.
It's understanding who actually holds the Bitcoin while the loan is
active, and that's very important.
Philipp: That is, I think, the most important part besides the interest
rate, but it's probably even more important than the interest rate.
How are your Bitcoins being stored?
Are they safe?
Are being the re ated.
So that's something you really want to get clarity on.
Um, custodial platforms, usually they are in some custodial setting, maybe
in a multi-site, maybe at a certified custodian like Bitco or Thea or Casa.
On our platform, we went with a very simple two to three multisig, meaning the
borrower has a key, the lender has a key, and the platform has a key, and you need
always two people to sign the contract.
And that means in the happy case, the borrower payback in time,
including everything he owed.
Then the borrower and the lender sign and the borrower gets back a collateral.
If there is, however, a dispute, meaning, for example, the borrower
didn't pay back in time, then we as the platform can jump in as a mediator and,
um, help the lender to retrieve the funds, or alternatively, the borrower
paid back, but the lender disappeared.
Died away, whatever.
Um, then we can also help to recover the funds.
Anja: Yep, yep.
That's, yeah, that's very important.
And yeah, I guess we can start now.
I thought it would be interesting to talk about the like end-to-end journey, um,
that someone would typically go through on the platform so they can understand.
How it might potentially look.
I know one of the speeches that I listened to you, I think it was at
parks, you said that one of the best things you can do is start out small
and just test out the journey before you start borrowing a larger amount.
So maybe we can just do a virtual version of like a walkthrough.
So I have a girlfriend who.
Once a spend $30,000 on a very lavish holiday, um, to Egypt, and she's got some
Bitcoin, she would rather get a loan, um, overselling it because that's selling
her Bitcoin triggers capital gains.
Um, she also doesn't wanna part with her Bitcoin because.
Bitcoin.
So if she was to use your platform, what is kind of like the first
step that she needs to do?
Is she eligible?
Is this a global globally access, uh, accessible platform?
Philipp: Totally.
Yes.
Uh, I think you started off already with the right, right assumption that she,
your girlfriend has a need for cash.
Meaning she couldn't or she wouldn't afford this trip to eat chip otherwise,
uh, if you don't need cash, then don't borrow against your Bitcoin.
So you really need to have this, this need of tapping into the
liquidity of your Bitcoin and you don't want to sell right now.
The reason why you wouldn't want to sell right now is you said it
already is no capital gains tax.
Uh, that's in many jurisdiction, particularly in Australia,
can hit you really hard.
Um, but also it keeps you the upside of your Bitcoin.
Like if you take a one year loan and you consider postponing the sale, selling of
your Bitcoin, just by one year Bitcoin might appreciate by another 14, 15%
or something, or what is time period.
So that's, these are the two upsides.
There are a few more, depending on your personal situation.
For example, if you would consider also taking a cash loan,
a personal loan from a bank.
Some people just can't do that or, um, don't want to do that because
you have to jump through all kinds of hoops of KYC proving what your income
is, uh, what's your shoe size, what's your blood type like, I don't know
what, what they're all asking you.
Um.
So on Bitcoin backed loans, you usually just rock up with your Bitcoin,
say, Hey look, I have this amount in BTC and I need this amount of cash.
And depending on the platform, no further questions are being asked.
Some platforms have KYC requirements, um, particularly the custodial ones.
We, because the regulator requires them to do KYC and AML checks on our platforms, we
don't have these KYC requirements because we don't have custody over the funds.
Uh, we basically act as a bulletin board, a blackboard where the borrowers.
Post, um, requests or the lenders create offers and then we just
match them with each other.
I.
Anja: Nice.
Nice.
So in terms of creating an account, what do I need?
Philipp: That is a good question.
Right now, the most minimal form is an email address.
Um, but we will change even that so that all you need is some form of pub
key, meaning you just say, Hey, um.
You take your hardware wallet and say, this is your identity.
And to log in, you just need to sign a simple message.
Uh, the email address is a convenience feature so that you can receive
emails, but it's not no actual requirement to have an email address.
So you just need to be able to log in, maybe log in by noster would be possible,
or log in with your lightning note.
Could be an option.
Um, but right now you need an email address and a password.
Anja: Yep.
Awesome.
So once I'm in the platform is my next step to essentially search for lenders
and have a look at what's out there.
Philipp: Yes, I would recommend one more step before, so it's a non-custodial
platform, which means we generate on, on a client side, your browser generates a seed
phrase for you which you need to back up.
So before you even take a loan, make sure to back up that seed phrase,
because that's your way to recover the funds after you took a loan.
If something goes down,
Anja: yes, that's a very step,
Philipp: yes.
See, you have no idea how many people don't do that even though
we actually show a warning.
Anja: Yeah.
Oh yeah.
Okay.
Yep.
That, that's interesting.
So back up your seed phrase people back up your seed phrase.
Philipp: Yes.
Anja: And is there a way to test it as well?
Philipp: Um, yes.
So we have a cool tool we call the Doomsday software.
Which is a, a tool meant for the case where we disappear as a platform
where letting us, that maybe was shut down by the regulator or all
our founders and team members died off or something, whatever happened,
uh, then you still, as the borrower want to have an option to recover your funds.
The Doomsday software is exactly for that.
So you put in your seed phrase plus some additional backup data you get on
your con when you open the contract.
And we also have a unique nsec generated for you and for the lender.
So there is a way for you to communicate outside of our platform
and then you can recover the funds.
You, um, to, to really fully end to end test the flow of your seed phrase, uh,
you would need to take a very small loan.
Anja: Okay.
No, that's, that's good to know.
Um, I love how casually morbid you are.
Like, do doom stay.
Um, okay.
Oh yeah.
Philipp: Yes.
It's very important in the space.
Like this comes from the doomsday of block five, FTX, uh, Mount Cox, uh,
Celsius, whatever they shut down.
Yeah.
And for users, a has no way to recover the funds.
It's just like, Hey, sorry mate.
You can't withdraw your funds anymore.
And with this tool, it's actually not hosted by us neither.
Um, it's currently hosted on GitHub pages, but you can download it and run
it yourself on your desktop or machine.
Anja: Love it.
Love it.
Um, okay, so we've gone through the very important step of backing
up your seed phrase, and when you're searching for lenders, what
information can you typically see?
Is it like.
Different interest rates and
Philipp: yeah.
So based on what you're looking for, usually you have some idea
of how much you want to borrow.
Um, I and for how long you basically put in these two parameters, but the,
the difference between the lenders is, um, the amounts, how much you can
borrow, the interest rates, how much you're going to pay, and for how long.
These are the three main arguments a, um, a lender will provide.
And then you see, you also see on our platform whether this is an um, uh,
I think we call it a vetted lender.
So we are working together with a few individuals and institutions who we
basically KYC, that know very well.
And we just give them a star so they're a bit more trustworthy and reliable.
Um, but you also see if a lender is new to the platform and like you see
how many contracts they did in total.
Anja: Yeah.
That's a really good point, and I'm gonna pivot a little bit.
Um, this might be more like the later steps of managing, um, the ongoing loan,
but now that you've said it, I'm afraid if I don't understand now, I'll forget.
But like, how much trust is required if you were to use a new lender
on the, on the platform and, um.
You are borrowing only a small amount, but you obviously you don't wanna
part with your Bitcoin at any amount.
Um, what mechanisms are in place to, to protect you essentially,
even if you are using a complete new
Philipp: Yes.
So at this point there is slight risk for the borrower not to lose funds, but
there is an a risk of missing the term.
Um.
I'm missing the word.
So the, the way how it works is you, from the platform, let's say there's
a lender, let's just call him Philipp.
He's very new to the platform.
And you as the borrower say, Hey, I want to take a loan from
you, Philipp, and I approve it.
Um, but I have no intention to ever give you the money.
Then you have to lock up the funds first, your Bitcoin.
So a multisig will be generated between you, the platform, and um.
Me.
Okay, that's weird because I'm the platform.
But then you as the borrower have to deposit the Bitcoin.
And now me as the lender, I never move forward.
I just disappear.
Don't react anymore.
Now you provided your Bitcoin, but you didn't get any loan from it.
Uh, there is no risk in for you to lose the funds.
It's just very annoying for you.
Um, you have to wait 24 hours before you can do another on chain
transaction and recover your funds.
Anja: Okay.
So it's not terrible.
It's just inconvenient.
Philipp: It's inconvenient, yeah.
Anja: Okay, cool.
Opportunity
Philipp: cost.
That's the term I was looking for.
Excellent.
'cause you, you might have to wait for 24 hours and maybe you really need the
money for something and you can't use the same collateral to take a different loan.
Anja: Yep.
Yep.
Okay.
That's a really good, good point.
Um, then, okay, so now we're at the step of, we.
Applying for a loan, we found a lender.
We wanna go ahead.
What do we do?
Philipp: Yes.
So you just say, Hey, um, I want to take this loan with
this amount for this duration.
So usually the lenders have a range of what they offer.
They say between 1000, a hundred thousand for between six months and 12 months.
And you just say exactly what you want and some lenders.
Uh, particularly the vetted ones have auto approval on, others have to go
through a manual, manual approval.
Like they literally get an email saying, Ania is looking for borrow
from you a hundred K for 12 months.
You're willing to accept that.
Do you actually have the cash available?
So this is a step to filter out non-responsive lenders.
So I, I have to, the lender has to do an active step there.
And then once he approved, I said earlier, the platform takes a public
key from each person, from you, from the lender and from the platform, and
then generates a multi-six out of this.
And then the next step is.
Actually, when you take the loan, sorry, you also have to say
where you want to get the loan.
We didn't talk about that earlier.
It's actually another very important point.
When you're looking for a loan, what is it you're actually borrowing?
And on our platform you can borrow stable coins, USDC, USDT on various
different platforms, but also some fiat.
Um, as, as of today we have Swiss Franc, we have Euros, and we have USD.
We do not have Australian dollars today.
But, um, anyways, whatever offer you pick, it usually says, Hey,
I'm offering USTC, offering USTT.
You have to be happy to accept that, um, stablecoin and that you
have to provide an address where you want to get the stablecoin.
Anja: Yep.
Yep.
Very good.
That was an important, uh, topics.
Um, we're sorry.
We're now at the step of applying for a loan covered.
We've covered the part where we reach out to, we select the duration and
the amount, and it's locked up away.
Sorry.
We've deposited collateral.
Yes.
Have we done that?
Yep.
Okay.
Philipp: Yes.
Yes.
So you get an on chain address and you send the money, and our platform
currently requires a single confirmation.
I mean, it's up to the lender to maybe wait a little bit longer.
There is no automatic disbursement.
So the lender will receive a confirmation email or notification on
Telegram saying, Hey, your borrower.
Deposited the money.
Um, here's the address.
There's a transaction.
You can verify it on chain, and then it's the lender's turn to disperse
the funds and he just sends you the stable requirements directly or does
a bank transfer and then happy times, um, you can go on your trip to Egypt.
Anja: Love that.
I love that.
Um, and did I see as well on your, on the platform, you're
also able to get a Visa card?
Philipp: Um, yes, unfortunately not anymore.
Okay.
Right.
Yes.
So we actually have two, we had three ways of how you could get the money.
First one was you could get it directly as a stable coin, um, or fiat.
The second one was you get it as a prepaid Visa card so that the stable coins are
actually sent to our card provider.
Fortunately, that card provider shut down.
That was literally just two weeks ago or something.
So it's, we are looking currently for a new card provider.
Um, but the third option is we have a partnership in Europe with Bring in
where the lender would then send the stable coins to bring in and bring
in, will convert it to Euros and send it directly to your bank account.
Anja: Nice.
Okay.
Cool.
Awesome.
Um, so then, yeah, um, I think we've got the.
We've received the funds, so now we can look at the management of the loan
ongoing, and we can go through a happy path first and then a happy path.
So I've received the funds.
What, what are what?
What is the happy path?
Like say I've got a loan term for one year.
And I have selected the interest only with the remainder to be
paid at the end of the year.
Um, is it as simple as that?
Is there anything else that I need to consider?
Is it just pay as you go?
Kind of, yeah.
Philipp: It's that simple.
Like the most important part is you need to monitor your contracts.
The LTV.
Our platform obviously does that for you and sends you a notification,
but it won't hurt to just write down the liquidation price yourself.
Um, use your mobile phone, tap trader or whatever to set your own custom alerts
that if the price ever drops, that you don't just rely on us sending your
emails, but you are informed before.
But otherwise.
You just wait for the 12 month to pass and eventually you pay back
the contract and paying back.
The contract is usually done in the asset you borrowed.
So if you receive the USDT contract on Ethereum, then you
have to pay back USDT on Ethereum.
Anja: Yep.
Nice.
Very nice.
That's another important question that I had and has been answered.
Um, but I also did, now that you've mentioned mobile, did I see that
you're potentially launching an app?
Philipp: Yes.
We actually have had, uh, an app, um, we just shut it down
because we do a complete rewrite.
Um, but yes, like initially our, our assumption or our learning was that.
Big money needs big screens, so usually people are more, feel safer if they
transfer a bigger amount on a bigger screen than using a mobile phone.
But it turns out we actually tap into a lot of retail traders who are using
smaller amounts, and they're just fine with using a phone and just popping over
a few K here and taking a small loan.
Anja: Yeah, I imagine if I was a user, I'm not saying I'm a big user,
but hypothetically speaking, I do like a desktop experience more even.
Um, so I'd be using, yeah, the desktop for the loan element, but the
mobile app would be useful for like.
You know, checking notifications and things.
True.
Make sure I'm not liquidated, wiped out.
Makes totally
Philipp: sense.
Makes totally sense.
Yes.
So you take the loan on your big screen and then on the mobile phone you just
check and maybe get push notifications on a regular basis if everything is fine.
Yeah.
Anja: Nice.
Very nice.
Yeah.
And now let's talk about the unhappy path.
Philipp: Yes.
Unhappy path.
The the most critical one, and that's very important for you to understand,
is if the Bitcoin price drops, you risk losing your whole collateral.
Um, math is not a hundred percent correct, but basically if the price drops by
50%, you get liquidated and the lender has a claim on all your collateral.
Uh, that's why we have this marching call system in place so that you get
a notification, email notification, um, and you have some time to top up.
Um, so yes, so there are two ways to prevent liquidations.
So you first, you, uh, have to monitor the price or you get your notification, but
then you can either top up the collateral.
Which brings down the LTV ratio, like you add some more Bitcoin or alternatively,
you pay back partially your contract.
So let's say your, um, Egypt trip turned out to only cost
you 20 K and you have 10 K left.
Yeah, I hope you, hope you didn't spend it on.
Um, I don't know what you do in Egypt.
Uh, you'll still have it, have it sitting aside.
Then you could use those 10 k or maybe some other spare cash.
You have to partially pay back the contract, which again will
bring down your LTV ratio and put your contract in a healthy state.
But if things go south, then you risk getting liquidated.
And the interesting thing, what we learned on our platform is that.
Some lenders are really, really nice people.
They don't want to liquidate you as the borrower because they know this is the
worst point in time to sell your Bitcoin.
Like liquidation means you're actually selling your Bitcoin 'cause price is down.
You have a capital gains tax event.
Um, you really don't want to be there.
Lenders do understand that and usually.
They, they didn't expect to get the money back now anyways, like, let's say price
dropped after one month, but they expected to only get it back after 12 months, then
they might be happy for you to, um, hey, top up now, or repay, repay partially,
even though I could liquidate you already.
And then the contract would go back into a safe, um, safe state.
Anja: Yeah, it doesn't surprise me at all.
Um, I assume, you know, it's Bitcoin is on both sides of the marketplace, so they
bring the Bitcoin ethos with them and Yeah, I, I, I, I'm not surprised that that
is the behavior that you're witnessing, um, in terms of the liquidation.
How much time do they have from when that notification comes up saying,
Hey, you're kind of low top up.
How much time do you have to act?
Philipp: That's a really good question.
There is no time limit.
It's a price limit.
So if there's, um, if the price keeps dropping, uh, every minute
further, further, then you might just get into liquidation.
And once the liquidation has reached, unless the lender agrees to, you
can't recover from this anymore.
Anja: Yeah, yeah.
So there's
Philipp: no, no grace period on our platform.
Anja: Nice.
Okay, cool.
That's important to know.
Um, yeah, it's, it's not the volatility of Bitcoin that's concerning.
It's more like.
Other things happening.
Like if there was an AI bubble that's burst, bitcoin's gonna be
the first one to react and who knows how, how far it would dip.
Philipp: Um, I think it's, it's more realistic that Trump comes up with
some crazy new tariffs ideas and pushes the Bitcoin price drought down
Anja: that is more predictable.
It's almost like waiting for that to happen.
Um, yes,
Philipp: it'll happen again and again and again.
Anja: Yeah.
So then what is kind of the end of the journey for the user?
Um, in both cases, obviously.
There's, you know, the happy, the happy path.
They just end up repaying their loan at the end, and hopefully they have kept
more Bitcoin and lost less money than they would have had they sold Bitcoin and been.
Um, charge for capital gains, particularly in Yeah.
Countries like Australia.
Um, what, what, what is the end?
Is there any, like, how do you part ways.
Philipp: Yes, that's a good question.
So the, the standard happy path is at the end of the long term, uh, you pay back
your, the, the loan amount outstanding, meaning the principle, the amount and the
amount you borrowed, plus the interest.
And then the lender has to confirm the repayment.
And if he says everything is fine, then he signs the, um, the transaction
and you can withdraw your collateral.
That's the standard happy path.
There are a few other ways.
For example, the uh, one approach would be to, during the lifetime
of your contract, actually you could withdraw excess collateral.
So let's say Bitcoin just keeps appreciating, appreciating
ULTV suddenly down to 10%.
You could consider doing something else with those Bitcoin.
You don't have to keep it locked up.
It's, I mean, it's safer to have a very low LTV, but maybe you just
want to take another loan against it, um, or sell it or whatever.
So this feature is not live yet, but if you have it in the pipeline that
you can withdraw excess collateral.
Another outcome would be to extend your contract with the current lender.
So some lenders allow you to just roll over your contract by another
term, maybe for another full year.
They have the option to adjust the interest rate there.
'cause interest rates are.
Changing over time, but this is the idea of having the buy, borrow die,
um, philosophy of you never pay back your contract so you, you can, um,
seamlessly extend it with the same lender.
If he's happy and usually institutional, they are always happy to just extend it.
Um, but another way would be to do a perpetual loan in a way of you borrow
from another lender and then with what you borrowed with the amount
you borrowed from the other lender, you pay back this loan and then you
basically extend it your contract as well, but just with a different lender,
Anja: that's too advanced for me.
Philipp: So let's say, let's say you owe me a hundred k. Yeah.
Um, but uh, less around the corner.
He also offers you a hundred K for another 10%.
Then you just happen to have another 200 K worth of Bitcoin sitting around.
Then you borrow from less.
You get the a hundred K and you pay back me the a hundred K. You get back your
Bitcoin and you have one contract left.
For now, this is a manual process, but we are looking at, um, how to
automate that so that you basically just switch the lenders with each other.
Anja: Yep.
Yep.
And in terms of fees as well, like what is the typical interest
rate offered by the lenders?
Is there like a range?
Philipp: Yeah.
Uh, it totally depends on the market.
So Lendasat is an open marketplace and it's heavily depends on how
much demand and supply is there.
We've seen recently contracts as low as 8%, but I would say
average is between 10 and 12%.
Anja: Yeah.
Yeah.
That's kind of to be expected.
Do you think, do you see that in time as more kind of competition comes
in, that's going to get lowered?
Yeah.
Philipp: Nice.
Totally.
Yes.
No, we see that already happening.
Lots of, um, custodial platforms are popping up.
I would say through the line.
All, um, have kind of similar interest rates around 10 to 12%.
Some of them are going lower.
Um, I'm not sure how they can manage that economically because.
The current interest rate on the market is just priced in that way.
It will get lower and lower because as we see like banks popping up offering
Bitcoin back loans, particularly in Switzerland, there's like the
Signum bank and so on, and they offer really, really low interest rates.
I think they started like 5%, but in return, they.
Take custody over your Bitcoin?
Anja: Probably re ated as well, I assume.
I think
Philipp: they, they're actually one of the good guys.
I mean, you never can, you can never trust banks fully, but, um,
they, they claim to not re ate.
Uh, I mean if they claim it as a bank, as a regular institution, I
don't think they have a way to do it.
Nevertheless, that would just kill them.
If they start lying.
Um, but yes, you give up custody over your Bitcoin and for some
Bitcoiners this is a north dollar.
But as, as more banks come in, they are sitting very close to the money
printer and they get very good, cheap interest rates, the general
interest rates will come down as well.
Anja: Yeah.
And also in Australia, I believe that if you do give up on the custody of
your Bitcoin, that that essentially does trigger a capital gains tax.
You kind of, the very thing you're trying to avoid doing is happening.
Philipp: Yeah.
So it's, it's, it's a complex matter, like the capital gains tax,
even legal opinion we receive based on what the atos writing is that.
If your Bitcoins get pooled, um, or mixed with another, with other
bitcoins, um, or converted to a rapid dc then there is a CGT event.
If you get back the same UTXR, um, for example, you put it in a multisig or the
custodian holds it in a single sink, um, then there is no capital against event.
More importantly, it depends heavily on what is the terms of service says.
As long as there's terms of service says that you are the ultimate
beneficiary owner of those Bitcoin, then there shouldn't be a CGT event.
Like for example, if you send Bitcoin to today to a centralized exchange.
Um, just to keep it there or with the attention to potentially
sell it in the new future.
There's also no CGT event if you just deposit it there.
So it's 'cause it's still in your account and owned, owned by you.
But if you use something like are they, or compound, which are lending
pools on Ethereum, then there is a capital against tax event.
Anja: Yeah.
Yeah.
Nice.
Um, I think that's it in terms of the questions that I had.
Um, do you get any other technical questions from more advanced users
that I don't know how to ask you, but you, you might wanna answer anyway?
Philipp: Um, well, so the, the.
The core assumption is that is a trust minimized approach
with a two to three multisig.
But as as biased as I am, that we are the best.
Do your own research.
Uh, there has been a situation in the market where a platform started off
as a non-custodial lending product, and then from one day to the other.
Switch to a custodial solution.
So you really want to do your own research and figure out if this
is a trustworthy platform or not.
Um, obviously we are, we are very trustworthy, but do your own research.
Um, even we have only been around for one year and you might feel safer
with going with a different player who has been around for a longer time.
Anja: Yeah.
Um, on that as well, a little bit, if we were to educate listeners.
In terms of what are the most important things to look out for when
assessing a lender, what would that be?
Philipp: Uh, we touched on that.
A bit already, like the LTV is very important.
Like what is the minimum?
LTV?
Some platforms, um, allow you to have a minimum LTV of 70%, and if they
have similar liquidation thresholds as we have, um, like starting from 80%,
then the price can't drop that much.
Like from 70 to 80% is roughly 10% price drop.
So that's one you really want to, to look out at.
Um, then the, the custody of where are your Bitcoins being held,
um, who has, has the key and most importantly, can the platform re ate?
Real ate means can they use your Bitcoin for other things?
And some platforms they do exactly that.
They basically take your Bitcoin and then start gambling with them.
And in return they give you better interest rates, but you might
risk them to lose your money.
So you really don't want to be that.
Another one is, um, the KYC aspect.
It's a very critical one, like.
We have seen heaps of data breaches, lakes, the Cher One, Cher Hack, or
Cher Breach, which many of Bitcoiners have been on this list probably.
Yeah, that's very, that.
I think that's even worse if you go to a lender because suddenly this lender
PLA lending platform is a huge honey pot of high net worth individuals or
institutions, and they know exactly what's your name, what's the address,
how much Bitcoin you have, because you provided your name, you provided
your address in the KYC process, and you deposited your Bitcoin.
So they have a very clear idea of how rich you are.
Because usually you don't use your whole stack.
You use like a fraction of it.
Then you might get targeted in the future, so you.
Personally, I would look only for no KYC platforms.
Anja: Yep.
Yep.
That's really good advice.
And before we wrap up, I do wanna ask about the other side of the marketplace.
If someone is interested to be a lender themselves, um, what, what can they do?
Philipp: Totally.
Yes.
So on our platform, this is an, an open marketplace.
So you as a lender, you are more than welcome.
Let's say you have an excess of cash sitting around, um, maybe you sold a house
or something and you wanna buy another one in a year from now, then the worst
thing you can do is keep your cash sitting on the bank account because you earn.
Two, three, maybe 4%.
Um, you are much better off to lending it out.
Um, support some poor bitcoiners who want to borrow, um, and
establish a, a Bitcoin economy.
But you get really choosy interest rates like.
We talked, we touched that as it's currently between 10 and 12%.
And if you have some cash sitting around, it's like a savings account,
a fixed term savings account.
You lend it out for a term and then you get it back, plus interest rates
and the risk to lose money as a lender, I would say is almost zero.
Anja: Yeah, that's really, really cool.
Um, I, when I was doing my MBA, one of the units that I did was strategy,
like strategic management, I believe it was called, and double-sided
marketplaces where all the rage.
Um, so the, the fact that we have one like is just amazing for
Bitcoin and I just really, really like the business model behind it.
Um, and also like that, you know, you can.
You don't have to be like a perpetual, sorry, a perpetual lender.
You can just do it if there's a need for like a year or so, and yeah, I like it.
I like it a lot.
Yeah.
Philipp: Yeah.
There's, uh, maybe one, one ask for people who have money
sitting on their offset accounts.
There's money is currently not earning your any interest.
I mean, it's implicitly earning your interest based
on how much your mortgage is.
But you could take that money out and lend it out at a higher interest
and then make a profit and return.
Anja: Yeah.
Nice.
Um, final questions I guess would be, is there anything on the
roadmap that you wanna disclose?
Maybe not, but I just thought I'd ask anyway.
Philipp: Yeah.
Uh, so we are currently very hyped about Arcade.
I'm not sure if you're familiar with that.
It's a new L two based on the ARC protocol.
Uh, I want to say it's similar to Lightning, but at the same time
it's not similar to Lightning.
We, the advantage of this is that you can have instant transactions,
and particularly for small loans.
Let's say you want to take a quick loan to top up your cart.
And you usually don't want to wait for a confirmation or, um, it's
not economically feasible to just lock up for a hundred dollars.
For these small amounts, we are moving our contracts to arcade so
that you can have instant transactions and really, really quick loans.
Anja: That's really interesting and too technical for me.
Philipp: It's very, very new.
Um, they launched, uh, I think in October or so this year.
So it's, it's very, very early, but we are one of the first
ones building on this platforms.
Um, it's, it's, it looks very promising.
I'm really happy about it.
Anja: Yeah, I, I love it when it comes to new things, you're trying to anchor
it with something that people know.
So you're like, it's like lightning, but not like lightning, but not,
Philipp: it actually, it actually uses lightning, so you can do, you have your
off chain money and you, if you want to transact, you don't have to do an
on chain transaction and the, the, the fabric connecting you and another page.
The payee where you want to send money is usually lightning.
So let's say you want to pay, um, a wallet of Satoshi user, then you
are on a Kate, fully self custodial.
You scan your QR code, which is a normal lightning invoice, and
then you do a lightning payment.
That's why it's similar to lightning, but the protocol is completely different.
Anja: Nice.
So just paint a picture for me.
Is this like as quick as, let's say I'm at a fuel station, I've just fueled
up my car and for some reason I'm out of fiat, can I quickly get a loan?
Like just to pay for the how quick?
Philipp: That's, that's, that's where we want to get to that, um, the name.
L Asat actually came from exactly that idea that you want to pay an invoice.
We didn't start with fiat, but we started with, um, lightning invoices.
So let's say your coffee shop has a lightning terminology, but you don't
wanna spend your SATs, then you can pay for that invoice by taking a loan.
So like really small micro loan for your $5 coffee.
You take a loan, but the invoice is getting paid instantly.
So you basically have someone is lending you a set, same,
could be with your gas station.
You just need to someone to make the conversion between SATs and fiat.
So maybe the, the gas station accepts lightning or there's a conversion
to some stable coins in between.
But that's where we would love to get to.
Anja: Yeah, I love it.
So it's kind of like the buy now pay later, but for bitcoin.
Philipp: Yes.
And that that's, we had this concept initially, but it breaks your brain a
little bit because my brain is broke now.
Pay later is like for people who can't afford things right
now, um, usually they're like really bad with money management.
They can't afford their groceries, but then half.
Through the month, they figure out, Hey, shit, I still need to eat.
And then they go shopping with this and know they get back the salary,
get the salary in a few weeks.
And with that they pay back the loan.
Buy now, pay later with Bitcoin is a bit different because you have to have
the money ahead of time and more of it.
So it's, so for your $5 coffee, you have to have $10 worth
of Bitcoin sitting around.
Anja: Yep.
Yeah, that makes sense.
I love it.
I, I love how humble you are.
Remember at at parks we were looking at you and talking behind your back and
thinking like, there's just Philipp just casually sitting there blending in, like
built this amazing platform and he's just like, you know, looks so humble about it.
Philipp: Thank you.
Yeah.
Anja: Now that've embarrassed you.
Philipp: No, not at all.
You're just flattering me.
Yeah.
Anja: Do you have any final, um, final things you wanna share?
Obviously I will link the platform and your Twitter page maybe, um,
to the show notes, but is there anything else that you'd like to
cover that I may have forgotten?
Philipp: Yes.
Uh, so given that we are an open marketplace, you can test out the
platform in a very safe way, meaning you register as a lender and as a borrower.
And for a test loan, you just take a loan from yourself.
So there is no risk of anyone being non-responsive.
You're locking up the money not correctly or something.
And then you can really test out the different features of what if the lender
doesn't respond, what's happening?
Then what if everything is fine?
I pay back.
How does it work?
What if they platform actually disappears?
Can I recover the funds?
Uh, and so on.
So you can really try things out 'cause it's an open marketplace
and open on both sides.
Anja: I love that.
And that again goes back to the ethos of verify.
Don't trust, like, yeah.
Yes.
Love it.
Philipp: Yeah.
Anja: Um, thank you so much for your time, Philipp.
And yeah, thanks for Well thank you.
Thanks for being on.
Thanks for
Philipp: having me.
Anja: Okay,
Philipp: bye.