Architecture
How BitU Protocol works
Last updated
How BitU Protocol works
Last updated
We're on a mission to build the onchain credit network and omni-trading hub, powered by our fully-backed and yield-bearing $BITU stablecoin. BitU Protocol delivers access to institutional level financial opportunities through a seamless unified experience.
Users can mint corresponding amounts of $BITU stablecoins based on the Collateral Ratio (CR) by providing supported collateral assets.
The minting process in BitU Protocol operates under a whitelist mechanism, meaning only whitelisted addresses can use their collateral assets to mint $BITU. Once minted, $BITU becomes fully decentralized and permissionless, allowing anyone to use it in the open market. No individual or entity can impose restrictions on the usage and circulation of $BITU.
During the minting process, each supported collateral asset has different collateral ratio requirements. Upon successful minting, the user's collateral assets are directly transferred to a trusted custodial address through the minting contract, where it is held by licensed custodians. No one can misappropriate or retrieve the collateral assets except for the depositors.
After minting $BITU, the collateral stored in the custodial institution is mirrored to centralized exchanges through the custodian's mirroring service, and managed by BitU's Active Liquidity Management Module (ALMM).
It's important to note that at this stage, the ALMM only manages the mirroring of the collateral on exchanges and does not have direct access or control over the collateral assets. The mirrored assets are subsequently used for two types of trading activities:
Lending
Market-neutral investment strategies
The yield generated by the mirrored assets through the ALMM will be sent to the BitU staking contract ($sBITU) in the form of $BITU tokens. Any user can stake their $BITU holdings in the staking contract to share in the yield earned by the ALMM.
Furthermore, users have the flexibility to unstake their $BITU from the staking contract at any time by burning their $sBITU holdings, and waiting a 7-day cooldown period. They can also sell their $BITU on the open market or utilize the minting and redemption contracts to burn $BITU and reclaim their collateral assets.
The ALMM collaborates with , the top prime broker for digital assets in APAC, to manage the mirrored assets. LTP assists the ALMM to implement risk control measures and maximizes yield generation for the strategies associated with the mirrored assets.
