Roughly figured out the BTCS revolving loan. It is different from other ETH micro-strategies on the market, where ETH is staked or stored on Coinbase after fundraising. BTCS, a company, chose to lend stablecoins with ETH through DeFi protocols such as Aave, and then used the stablecoins to buy more ETH, and then pledged and re-buy, and the current leverage limit here is 40%. That is, deposit 1E, borrow up to 0.4 E equivalent of stablecoin, and use it to buy E. For shareholders, for other ETH microstrategy companies, the annualized return of simply hoarding coins may be 1 – 4% (including staking), but BTCS with 1.3x leverage, the theoretical return will be amplified to more than 5%. If ETH rises even more, the gains will be magnified again. This also helps the market hype about it to be more like a DeFi version of a microstrategy company. But correspondingly, once the price of ETH pulls back sharply, this part of the borrowing may trigger liquidation risk, so it must constantly monitor the market and may cover or reduce positions at any time. These are all clever things that have come up with them, and they are too brilliant.
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