Bitcoin as collateral, multisig wallet, non-custodial loans and p2p. Interview with Max Keidun, CEO of Debifi.
During the Plan B Forum conference in Lugano, Atlas21 met Max Keidun, CEO of Debifi, to discuss a trend that could open new opportunities for major financial institutions: non-custodial lending using Bitcoin.
Why did you decide to create Debifi?
From the beginning, we started developing non-custodial financial tools. At some point, we thought we could approach large financial institutions like banks; the initial idea was to get them into the Bitcoin Standard. Banks understand the lending market very well. However, we wanted to do it with values that aligned with Bitcoin’s white paper, meaning with three fundamental principles: non-custodial, peer-to-peer, and Bitcoin-only.
Debifi is non-custodial, Bitcoin-only, and allows you to interact with your counterparty directly.
How is it possible to remain in possession of your private keys and give Bitcoin as collateral to request a loan?
Every time a loan agreement is established, Debifi guides the creation of a 3-of-4 multisig wallet. The four keys are distributed to four different entities: one to the lender, one to the borrower, one to Debifi, and one to a trusted independent entity. The technology is open-source and verifiable by anyone.
It’s not possible to move the collateral once locked. There are three specific situations where the collateral can be transferred:– when the borrower repays the loan and the collateral needs to be returned;
– when there’s a liquidation, meaning the collateral value drops too low and the borrower can’t repay the loan or add funds to the collateral;
– when there’s a dispute for any reason.
In a multisig system, the incentives to collaborate between parties rather than create conflicts are greater. For this reason, disputes are very rare.
Do you believe the major use cases are for the retail market or for companies?
We developed Debifi specifically for companies, banks, and to onboard traditional finance onto Bitcoin. On Debifi, you can only be a lender if you’re a regulated entity with a license or if your business structure allows you to give loans. On the contrary, borrowers can be both private individuals and companies.
How are interest rates calculated?
It’s a free market. Each lender publishes their offer based on two factors:
– rates of other offers;
– cost of capital.
We expect that as the number of lenders on the platform increases, competition will increase and interest rates will decrease
What do you think are the incentives for large financial institutions to understand and use a similar model compared to granting loans in the traditional way?
Bitcoin is the perfect collateral. Its market is very liquid and you can sell the asset 24/7. I believe this is the best incentive there is. If you use real estate as collateral and the borrower can’t repay the loan, you’ll end up with a property you need to sell, a process that can take months or even years. Bitcoin can be sent to an exchange and sold quickly.
Another incentive is that Debifi handles all the work and infrastructure needed to onboard companies that have liquidity but don’t operate in the lending market. The third reason is that we can bring new bitcoiner clients to banks.
Don’t you think this model could reduce the role of banks in the current lending market?
No, it’s a complementary model. We offer them a model that can work alongside the current one. We offer them access to a new market. There will always be people who trust banks. In the future, it will be possible to choose between the two lending models.
