Dear Investors,
For this month’s investor newsletter, I wanted to provide you an update on both our liquidity (i.e. our merchant network) and our current thinking on yield generation via DeFi protocols.
Amber Group has finished onboarding as our first liquidity provider and are soon contributing $1Mn TVL (half in dlcBTC and half in wBTC) to our Curve pool on Arbitrum.
As a reward for their being a first mover, they have already received several purchase orders for dlcBTC, and will earn their standard fee of 10-20 basis points on each order filled.
Meanwhile, we have encountered a technical blocker that is slowing down our efforts to onboard others. DLCs rely on Schnorr signatures, which were enabled in Bitcoin's Taproot upgrade.
This means that only custodians and wallets that support Taproot can mint dlcBTC.
Unfortunately, currently, only a few custodians and wallets support it. Amber was able to fully onboard because they built Taproot support into a custom in-house wallet.
To make interim progress, we have launched a Ledger app that will enable smaller BTC holders to self-wrap using Ledger Live.
This is useful for Bitcoin miners and High Net Worth Individuals who are price-sensitive and do not wish to pay the fees associated with using an MPC custodian.
However, for institutions, the use of a qualified custodian is mandatory. We are developing partnerships with MPC custodians such as Cobo, SafeHeron, and Utila, who are all open to integrating Taproot to support us.
We’ve begun an initial conversation with Fireblocks’ CEO as well. All this will lead to more institutions onboarded as merchants, to provide more dlcBTC liquidity.
While the work to build out our merchant network continues, our next focus is incentivizing retail demand.
We are continuing our search for various yield opportunities. As any wrapped Bitcoin, dlcBTC can be used as collateral for earning yield through lend/borrow, stablecoins, options and other strategies.
In my last update, you will remember that I referenced Swaap, a protocol that can generate around 10% safe yield using dlcBTC collateral in a recursive ETH staking strategy.
By using leverage, protocols such as Archimedes anticipate being able to potentially generate even more APY, potentially closer to 20%.
However, due to the proliferation of Bitcoin L2s and the excitement around Babylon, retail is now searching for simple, “one-click yield” options.
In this regard, I see an opportunity: as an ERC-20, dlcBTC can secure PoS chains via staking platforms such as Eigenlayer, earning users a “Bitcoin staking” yield.
We often get asked about Babylon, so let me take an aside to briefly describe our differences. Babylon has built a complicated, custom system for earning yield.
Ultimately, we believe that its complexity limits their potential.
Monolithic, complicated systems often come with hidden vulnerabilities and, as the industry matures, they tend to be replaced by simpler, more interoperable systems that are more versatile.
Instead of staking in Babylon, our merchants can provide retail users dlcBTC, which is fully composable in DeFi.
The merchants have an incentive to participate, as they are able to maintain self-custody and are not exposed to unknown risks.
Meanwhile, retail can use their dlcBTC in any staking protocol, on any chain.
In this regard, the strength of dlcBTC is in its adaptability. Instead of limiting users to one specific approach, dlcBTC enables a myriad of financial products, including approaches yet to be discovered.
Conservative customers such as institutions value the security guarantees of self-wrapping, and we’re excited to see dlcBTC unlock a wide range of DeFi products that deliver safer yields.
Overview
We’ve successfully launched dlcBTC mint capability on Ledger Live. Users can now self-wrap their BTC using Ledger, which supports Taproot. Additionally, we are in discussions with MPC custodians to implement Taproot for dlcBTC merchants.
We are signing up our initial set of dlcBTC Merchants, focusing on high-priority deals with IMC, RockawayX, Time Research, Hashkey OTC, Psalion, Nascent, QCP, LTP, Flow Traders, Cobo and SmartBitcoin Labs. These dlcBTC merchants will serve as sources of BTC deposits.
We are also partnering with DeFi protocols, including Swaap, Curve Lend, Jasper Research, Vaultcraft, Pencils Protocol and Pattern Research. These protocols will list dlcBTC within their platforms, providing use cases and incentives that drive demand for dlcBTC.
Sales and Business Development
We’ve in conversations for listing $dlcBTC and $DLC with leading centralized exchanges, including OKX, Binance, Coinbase and Kraken.
The Liquidity team, makers of the Top 15 stablecoin LUSD, is now building Liquity v2. They have offered a partnership by which we would create a stablecoin, dlcUSD, using their existing technology platform. They would provide the technical expertise, and we would share the revenue. This is a great way to collaborate.
Marketing and PR
We’ve published a number of articles recently, including a comparison between dlcBTC and Babylon and an overview of the dlcBTC merchant system. For more, please visit: https://www.dlcbtc.com/media
We invite all investors to join our Telegram community at English: https://t.me/dlcbtc
For native Mandarin speakers, you can join our Chinese community at https://t.me/dlcbtc_cn
Follow us on Twitter at https://x.com/dlcBTC
Testimonials
A few recent quotes from our fans:
“You’re a better, faster, cheaper version of wBTC” – Head of Trading at a leading prime brokerage
"We see DLC.Link as a foundational building block in DeFi, with the potential to become a multi-billion-dollar business. " — Nicole Liu, Comma 3 Ventures
"DLC.Link is making Bitcoin more composable & usable in DeFi" – Oliver Birch, Global Head, Chainlink BUILD Program
"You're sovereign Bitcoin for everything else” – Leading Bitcoin Investment Fund
Product
We are launching our initial DLC Attestor Network to production! Our initial attestors include HashKey Cloud, Republic, OKX, P2P, Stakin and Dextrac. We are starting with a 5-of-7 attestor network and are soon expanding to 10-of-15.
We’ve begun implementing Chainlink Proof of Reserves. Also, we’ve chosen Chainlink CCIP as the bridging technology that we’ll use to bridge from Arbitrum to Ethereum L1, as well as to L2s including Polygon, OP and Base.
We’re making good progress on our $DLC tokenomics development. We’re on track to launch $DLC in Q3. The core purpose of $DLC will be to help decentralize our DLC Attestation network.
Finance and Fundraising
This Q2, we are actively preparing to raise a seed round of $7-10 million. We have initiated discussions with potential anchor investors. Given my location in New York, our focus is currently on identifying one US-based and Asia-based co-leads.
For this round, we aim to engage our customers as investors. Therefore, for every $10,000 of BTC invested, we will require the investor to self-wrap 1 BTC into dlcBTC for use in DeFi (while retaining full custody of both their BTC and dlcBTC).
How You Can Help
We are actively looking to form partnerships with a wide variety of financial institutions, including hedge funds, OTC trading desks, prime brokerages, custodians and other financial institutions that hold or trade Bitcoin.
If you are in contact with any institutions that hold BTC or wBTC, please introduce me directly.
Best,
Aki
PS – Missed any of our previous Investor Updates? Read past editions here: https://bit.ly/dlc-link-investor-updates
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