Renewed Conviction

This update was delayed as we worked on setting up a new fund to grow the auto finance business. The bank account, documents and new entity were all ready to go while every instinct was screaming against it. We were charging effective profit rates of 20-25% in the name of being interest-free, keeping 15% after losses and paying out 10-12%. It’s good business that just does not work for us.

There is no data that quite validates why it does not work, and here are two anecdotes for what we don’t want to do.

1. Last Thursday, we were caught in 4-hour back and forth between insurance brokers, the vehicle registration authority in BC (ICBC), the buyer of a car and a few levels of management just to unentangle a simple administrative error by one other broker 3 months back. It got to the point where we threatened to call some owners with the names of incompetent employees if they didn’t solve the problem for us. It was finally solved.

2. As we advocate for investors, friends and family to start accumulating Bitcoin, we are sold an excuse: “my money is tied up in cars with you right now.” Now, they may or may not be allocating extra stacks of cash for and despite that reason, but we have indeed locked people in. Regulators won’t allow trading, especially as we have engaged them about this in the past - not even if we got the right licenses with $10M in assets to make it well worth it.

Our takeaways have been:

• avoid regulatory red tape with free and open-source protocols
• build for liquidity that doesn’t print, gate-keep and toll like fiat rails

Speaking more personally as Hudhaifah, around this time last year, a close advisor helped me discover that I will go above and beyond, maybe just shy of conformity, so as to consider every opinion and not look bad to others. As I turn 30, and look forward to the next decade, I am letting that go and sticking to my guts.

A note Hudhaifah wrote himself 11 years ago

Ongoing Efforts

Previously, in seeking Bitcoin revenue, we built MVPs demoing what we could do:

• In the world of Ordinals, we inscribed a neural network bringing art to life: https://inscribedgene.netlify.app.
• built a BTC lending demo that showcases self-custody methods for locking up Bitcoin as a guarantee for a loan: https://bitcoin-loan-mvp.vercel.app/.
• tried a peer-to-peer options deal on paper set up a personal agent that filters through messenger API for FB Marketplace tire kickers and helps identify serious buyers.

Outside this, we’ve run many models, had plenty more conversations and updated our website twice along the way with another iteration coming: https://grynvault.com. We’ve made a little bit of cash from some of these ventures and nothing to write home about.

Most recently, we were inspired by RadFi and their 2/2 multi-sig trading wallet and virtual blocks technology enabling AMMs on Bitcoin as well as the the use of OYL Corps Alkane protocol by ID Club bridging stablecoins onto Bitcoin. This technology unlocks a whole new world of possibilities.

RadFi AMM on Bitcoin

What’s Next

Our journey today derives from a simple question: why can’t we borrow Bitcoin against Bitcoin? We got to looking at options that go beyond “borrowing against Bitcoin.” Is there a way to get liquidity for ventures on a sound money standard that goes beyond debt? In other words, we are on a quest to discover how Bitcoiners can trade time preference.

We found that Bitcoiners have started using many hedging tools to improve their exposure or better surf through the volatility of Bitcoin. Bitcoin treasury companies are the loudest of such efforts and MSTR has had incredible success. The newest ETFs by Calamos also highlight downside-protected participation in Bitcoin upside. Options and futures have also long existed on CME and Deribit, and are used by these entities to aggregate liquidity especially as it gets fragmented over longer time horizons, PLUS take advantage of wholesale borrowing rates.

Who’s yet to benefit from these tools? Bitcoiners that prioritize self-custody, have been hurt by BlockFi, Celsius and FTX, or are becoming increasingly wary of custodian risks from cyber attacks to government custodianship under the guise of institutions becoming “too-big-to-fail.” If this is you, please reach out.

We’re building a BTC-native protocol for earning discounted Bitcoin receivables, letting Bitcoiners trade time preference without complex options or risky loans. Buyers get a USD savings account earning Bitcoin interest with ~25% BTC exposure and downside protection. Borrowers get USD now with capped fiat repayments and no liquidations. It’s a smarter, cheaper, and faster way to do business in Bitcoin and stay long BTC.