SquaredLab BTC²

Inspiration

While leverage is rewarding, liquidation wipes out the capital. Having a better risk-reward balance can be high useful for recovering when the market bounces back.

What it does?

BTC² tracks the squared price of bitcoin on a protocol layer giving a mathematical approach to leveraged Bitcoin trading without liquidation. BTC² is not a synthetic version; it is 100% backed by BTC.

Working

Imagine a scenario where the spot price of BTC is at $100, resulting in an initial BTC² Index value of $10,000 (100²). With a 25% increase in BTC's price to $125, the BTC² Index value increases to $15,625 (125²), resulting in a 56% gain for a 25 % spot BTC increase. Conversely, a 50% drop in the spot price to $50 reduces the BTC² Index value to $2,500 (50²), signifying a 75% decline. What sets BTC² apart is its resilience; while a 2x leveraged position would be liquidated, BTC² enables you to endure market downturns and potentially recover when the market eventually favours your position.

How we built it?

We implemented Power Perpetuals and enhanced the mechanisms to work with Bitcoin.

Challenges we ran into

The biggest challenge was the pricing formula.

Accomplishments that we're proud of

We are testing it on Arbitrum, making it more effective for Transactions speed and costs.

What we learned

We have learned the learning curve can be high due to the complexity of the protocol. We are working towards simplifying it as much as possible.

What's next for SquaredLab BTC²

In near future we are planning to have 2 vaults;

Arbitrage vault between BTC and BTC² Dynamic hedging for BTC² In phase 2 we plan to have more powers for bitcoin and Squared Stable coins to expand the use cases.