[ARCHIVED] Lend BIT to Kbit

General Archive
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Proposal Title: Lend BIT to Kbit
Author: Ed Tolson
Date: Jan 14, 2022

Hello BitDAO community,

My name is Ed Tolson and I am the founder of Kbit Global Ltd, a market making and high-frequency crypto trading firm. I have a 20 year career in applying computer science to algorithmic trading. I founded Kbit in 2017 and most recently before that I was the Director of Trading Technology at Citadel. Kbit has been performing spot market making and high-frequency strategies in the crypto space since 2017 and we are active on most of the large crypto spot markets. We trade several billion USD-equivalent a month in altcoins on spot markets.

We have been actively trading on the Bybit spot markets since they launched in mid-2021. In this context, we are interested in trading BIT on Bybit and in seeing it launched on other exchanges. We are well suited to trade BIT since we are very active in deeper altcoins with lower market caps. In order to facilitate our firm to do high volume trading of BIT on Bybit and other exchanges, we would need a loan of BIT tokens.

Proposal:

BitDAO to lend Kbit 5 million BIT tokens for 12 months with zero interest. Kbit will use the tokens exclusively to facilitate market making and high-volume trading on Bybit and to pursue listing, market making and trading on other exchanges. We will aim to trade $250 million to $500 million in monthly volume of BIT during the duration of the loan.

Benefits for BitDAO:

Increased liquidity and volume of the BIT token, which can help garner attention as well as provide improved liquidity for investors and traders to facilitate larger investments.

Benefits for Kbit:

We will use the loan of BIT to facilitate trading and be entitled to keep the profits. As the BIT token becomes more successful, is listed on other exchanges, and has an increase in overall activity and trading volume, the profitability to us will go up, thereby aligning our incentives.

Additional Background on Kbit:

As a crypto quant trading firm, we keep a low profile, but we’re well known by most of the large spot exchanges. We have a team of 10 people, geographically distributed. I was featured on the Binance podcast (https://twitter.com/binance/status/1165664730075123712) and the Nomics podcast (The High-Frequency Trader Responsible For 0.5% of Crypto Volume).

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@kbit an interesting proposal. I can see that additional liquidity on exchanges should help the overall adoption / price BIT in the long term.

What mechanism do you have mind for the ‘lending’?

In an ideal world, trading would always end up in the money, but alas that is never guaranteed.
Would you be thinking a version of performance bonds, tokenization or a simple transfer to a KBit wallet & a promise to return it in 12 months :grin:

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Hi @monkey_scratch_head ,

Thanks for the reply and questions. Regarding the mechanics of the loan, I was thinking a simple transfer (meaning an uncollateralized loan). We’d be happy to have a loan contract in place. We generate a high return on capital, so tying up capital as collateral is expensive and wouldn’t really work for us. We’ve had several similar uncollateralized loans from token projects for the purpose of market making / increasing liquidity in their token. And of course we’ve always repaid the loan at the end of the project. We also have a public onchain record of uncollateralized loans and repayments from Truefi: https://app.truefi.io/borrowers/0xBc8e650Bac6A7590F19A958e0F57ac97261677f0. Finally, we have a five year track record of consistent returns in up and down markets and a solid balance sheet.

Best,
Ed

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Hey. Ryan from TrueFi.io here. Saw this on Twitter and wanted to chime in.

We’ve been working with Ed and KBit since September of 2019 as one of our market makers (first on TUSD and now on TRU). They’ve been an exceptional partner to work with and I strongly endorse them. They provide weekly spread reports and are always happy to adjust if we (a) have a request (b) are getting listed on a new exchange.

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Interesting proposal that needs more details on governance and the control of the treasury allocated to Kbit.