This is the sixth article in the "Kay's DeFi Notes" series. This series is dedicated to providing some common sense about DeFi in the most easy-to-understand language, including not limited to general concepts such as impermanent loss/AMM, or about the principles of new projects , Design analysis, and strive to make melon-eating people who don't understand DeFi at all understandable. I hope I can write at least 30 articles.

The author has no background in traditional finance and encryption mining. This is a non-serious series, focusing on the sorting out of personal thoughts and self-expression. People who read it can just read it casually, and those who write it can write whatever they want.

TLDR: Hashrate tokens are securitized mining machines, using DeFi Staking (mining) to create a second layer of gaming and FOMO.

Intro

The new currency mining of Binance’s launchpool in early January is BTCST, which claims to use CeFi + DeFi to solve the asset securitization of standardized computing power, because the yield of the previous few phases of new currency mining is quite high, attracting a maximum of one billion TVL at the dollar level.

Last week, BTCST was also listed on Binance. According to the market price, it was once jokingly said that the mining machine of more than 3,000 yuan was sold to 100,000. At the same time, Biyin, as one of the largest mining pools in China, also launched a similar standardized computing power product pBTC35A ( POW BTC-35W/T) and opened trading and DeFi mining at the same time.

Selling a mining machine worth more than 3,000 yuan to 100,000 yuan, is there a bubble?

Of course there is, but we must admit the bubble and study the bubble.

minimal description

• Binance’s BTCST single currency corresponds to 0.1T of 60W mining machine computing power, while Biyin’s single currency corresponds to 1T of 35W mining machine computing power

• It can be purchased directly, but the purchase will not bring daily BTC mining income

• BTC mining income needs to be staked (pledged) into the corresponding contract through DeFi to receive

• Compared

Compared

Made a form, which is relatively clear.

Although both BTCST and pBTC35A have standardized computing power, the corresponding energy efficiency ratios are not the same. Each selected the latest spot price of a model with a relatively close energy efficiency ratio (note that it is not the sale price. For example, the S19 futures have been scheduled until 2022. The futures price It is not meaningful).

Compared

Note 1: Equivalent to the price of the corresponding mining machine

The calculation process of equivalent mining machine price is as follows:

Equivalent corresponding mining machine price = unit computing power price * corresponding mining machine computing power T number * USD exchange rate

corresponding:

BTCST equivalent to T15 price = 73.45*10*22*6.4 = ¥103417.6 (multiplied by 10 because each BTCST corresponds to 0.1T)

pBTC35A equivalent to S19 Price = 100*90*6.4 = ¥57600

Note 2: DeFi pledge rate

The BTCST and pBTC35A tokens pledged into the DeFi contract can be rewarded in proportion to all issued standard computing power tokens.

Taking BTCST as an example, a total of 1,000,000 standard computing power tokens have been issued, and only 68,084.40 of them are staked in the contract. -14 times bonus, but in fact it is marked as 8.81 times bonus on the website. This is because when the BTCST pledge rate is less than 60%, the pledged tokens are divided into 60% of the total income of the day, and most of them without a share enter the protocol vault.

The revenue distribution methods of Biyin’s pBTC35A and BTCST are slightly different. The revenue of unstaked computing power tokens is distributed to the second pool (pBTC35A-USDT liquidity provider) as excess revenue, and the first pool distributes profits according to the actual mortgage computing power.

BTCST yield page:https://get.1-b.tc/#/history

Currency yield page:https://mars.poolin.fi/#/farm

Biyin stake contract address: 0x5cbade4d03ea436f792e9f939e70908524949efd

Note 3: Computing power standardization method

Taking BTCST as an example, the computing power of 60W/T can be formed by balancing multiple mining machines of 45W/T (such as Antminer S17) and 75W/T (such as Antminer S9 SE), and it is not necessarily required that the computing power is just stuck at 60W/T .

Mine circle grayscale?

BTCST claims in the PR that it wants to create a "grey scale of the mining circle", which makes sense.

Grayscale logic: Due to the demand for buying coins, compliance costs, liquidity scale, etc., compared with the BTC price, the GBTC premium exists for a long time. Institutions deposit BTC in exchange for GBTC, and realize premium arbitrage by off-site hedging

Grayscale logic of mining circle:

Because the liquidity premium, DeFi pledge rate, and CEX transaction scale are compared with the original second-hand market size of mining machines,

• The computing power premium may exist for a long time (if you sell computing power tokens, you may be able to sell them at a higher price than the second-hand market of mining machines)

• Because the DeFi pledge rate cannot be 100% (there must be some people who are only short-term speculators and will not go to the DeFi contract to pledge mining), the mining income multiplier must exist (if you do not sell the holding computing power tokens, you will definitely be able to get a ratio Directly mining higher bitcoin income)

reasonable valuation

Refer to the fair price of the corresponding energy efficiency ratio mining machine:

Fair price = corresponding energy efficiency ratio mining machine second-hand market unit computing power spot transaction price * liquidity premium / long-term DeFi pledge rate

Note: This valuation method may become invalid after the leveraged token market surpasses the second-hand mining machine trading market.

The liquidity premium is based on the standard of the currency circle, and 1~3 times are considered sideways lol

The long-term DeFi pledge rate may refer to the proportion of tokens such as YFI in CEX/DEX. Currently, Binance’s BTCST and Biyin’s pBTC35A are at two extremes (<10% and >90%). Converge somewhere in the middle.

BTCST should be mint with more computing power tokens, and the pledge rate should become higher from 6.8%.

Here is an imaginary situation: For example, Binance directly supports BTCST staking on the App side, which may raise the pledge rate to an extremely high level, but first of all, such operations are very cumbersome in terms of business logic, and need to add customized functions; Secondly, the current BTCST can easily promote BSC on BSC, and there is no need for motivation.

As Biyin’s pBTC35A is listed on more exchanges, the pledge rate should become lower from 91%. At the same time, the income distribution method is slightly different from BTCST. -USDT liquidity provider) as excess income, a pool divides profits according to the actual mortgage computing power, which is not exactly the same.

in conclusion

in conclusion

It is generally believed that the mining machine is a physical BTC option, then the asset securitization + DeFi mining mining machine is a leveraged asset securitization real option, which is a bit of a mouthful, and I don’t know what it is.

But it is indeed native to the encrypted world, something that has never appeared in history (in the traditional futures world, has there been a product that can buy out all the future production of pigs/soybeans in a certain area in a standardized way? Personal cognition seems to be There has never been such a trading tool), especially after adding DeFi mining so that the DeFi pledge rate will always be <1.

In the whole process, it seems that the intermediary of the original second-hand mining machine dealers has been removed. If the pricing is relatively fair, it is of great significance. Think about the 30,000 S9 in 2017. If there were corresponding financial products at that time and the pricing was fair, the bull market earned The multiple will be much higher than BTC, and there is no risk of liquidation.

Of course, entering a bear market is another matter.

In addition, the mapping of computing power into tokens is still a centralized method. Both Binance and Biyin are giants in the industry, and the probability of doing evil is relatively small. With the increase of similar products, it is necessary to beware of evil methods under the guise of such names .

Just like the cloud computing power of chicken feathers all over the place that year.

Well, we still have to be optimistic, just sauce, happy new year.

Kay