Bitlocus proposes a new product - Fiat-DeFi Management Platform - to make the user's experience with DeFi smooth and cost-effective, and a one-stop-shop.
By positioning itself between the users and DeFi protocols, Bitlocus creates an additional value by solving these issues for the users:
mitigating the risks
minimizing/removing the blockchain costs
simplifying the UI/UX
The schema below displays the rough interaction area for the typical investor where it can be seen that no direct interaction with DeFi is required from the client.
The investment into DeFi procedure is simplified to just a few basic steps on Bitlocus CEX. No specific IT, crypto, or DeFi knowledge is required - just regular web use skills similar to online shopping:
The DeFi investment proposals will be categorized in risk-based options with some main information: estimated APY, risk level, protocol list and investment's distribution ratio among DeFi protocols. Some of the investment options will have an insurance fund or 3rd party insurance service either built into the proposal or as an additional option.
Bitlocus will build a market incentivised model where the new crypto asset - BTL utility token - will play a crucial role in the system. It will be barely noticeable for fiat-based investors and in the spotlight for BTL token holders.
BTL token utilities include:
Payments. There will be a discount for platforms service fees paid in BTL.
Access. Some certain features and services will be solely related to holding a certain amount of BTL.
Rewards. Various incentives for BTL token holders on and off the platform.
Speculation. The growth in Bitlocus services usage will result in the increasing demand for BTL token, hence the increasing token value. Also, a certain amount of fees collected will be used to buy BTL tokens at market price and then burned thus making it deflationary and also effecting the value of the remaining ones.
Bitlocus will make the DeFi investing a one-stop shop with the help of utilizing the BTL token. As mentioned above, BTL’s existence will be barely noticeable for fiat-based users while heavily utilized for BTL token holders as displayed in the scheme below.
The costs may be significantly saved. These are the costs related to a DeFi investment via Bitlocus gateway:
To mitigate the risks arising with DeFi protocols, Bitlocus takes several approaches described in the table below.
When it comes to choosing the DeFi protocol for investment, the user is typically distracted by huge possible returns (sometimes more than 100% annually), ignoring the risks associated with the protocol itself. In the short history of DeFi, there were many exit scams, hacks and other mishaps that resulted in permanent losses for many users. We see our added value by picking the low-risk protocols that are well managed, constantly growing in total value locked and providing stable returns.
Since the global currency is USD, the DeFi industry is not a distinction too, and the USD denominated products dominate the market. If the client invests other than USD currency, he/she faces currency rate risk, especially when the target period for investment is more than a couple of months. For example, if Emilia from Italy invested 1000 EUR into DeFi in February 2020 and earned 8% (in USD) interest rate, her net return in EUR would be even negative because the USD/EUR rate has declined more than 9% during the same period. For retail investors, also considering such a small amount, it is not easy to hedge currency rate risks. Bitlocus will tackle this problem by the use of financial derivatives to minimize or eliminate the impact of currency rate changes.
By participating directly in the DeFi protocol, any user must take many steps to access the protocol and its services. This results in a complicated UI/UX, often requiring the use of several apps, reading/watching multiple manuals and explanation videos, and tracking current investments in an external app like Blockfolio or Excel. Using the private wallet also bears the risk of storing and protecting the private key, the loss of which can result in inaccessible funds. Bitlocus takes an effort to combat these problems by over-simplifying the UI/UX for users, combining several complex transactions into one user action. The headache of the private key management is removed by having identity-based accounts which are secured with multi-factor authentication, also the fiat funds are only withdrawn to a personal bank/payment account.