CONNECT WITH US
Web3 & Blockchain

Web3 & Blockchain

Understanding Digital Money and Digital Yield

Bitcoin Magazine logo

Published on

Add as a preferred source on Google
Understanding Digital Money and Digital Yield

The new business model of building on top of digital credit to create digital money and digital yield can be roughly categorized into two different architectures. 

This article gives a general overview of these models, with an analysis of economic implications. 

To get started, I will define these terms. Digital Credit is the credit-like instruments issued by corporations with large Bitcoin balance sheets. Today they are five Nasdaq-listed perpetual preferred equity—STRC, SATA, STRK, STRF, STRD—and all five are the top five most liquid preferred equity securities in the United States. Digital Credit is L2 because it is built on top of Bitcoin, which is L1. 

Digital Money and Digital Yield are the L3 products that could be built on top of Digital Credit. 

Now obviously, Bitcoin is Digital Money. In this article I am using the terms popularized by Michael Saylor in corporate bitcoin discourse to describe the economic ecosystem that is emerging on top of public company issuance of Bitcoin-linked securities. 

Under that paradigm, Digital Money refers to something that holds a very stable fiat-denominated value that is built on top of Digital Credit. And Digital Yield refers to something that concentrates and amplifies the yield of Digital Credit. Both Digital Money and Digital Yield are L3, since they exist on top of L2 Digital Credit. 

Now that we know Digital Money and Digital Yield, we will move on to the different architectures for them. 

The first and primary one is a debt-based tranching structure in which the digital credit is used as the base collateral asset.


Source link
Related Topics:Web3 & Blockchain

Disclaimer

We strive to uphold the highest ethical standards in all of our reporting and coverage. We TheMorningPulse.fyi want to be transparent with our readers about any potential conflicts of interest that may arise in our work. It's possible that some of the investors we feature may have connections to other businesses, including competitors or companies we write about. However, we want to assure our readers that this will not have any impact on the integrity or impartiality of our reporting. We are committed to delivering accurate, unbiased news and information to our audience, and we will continue to uphold our ethics and principles in all of our work. Thank you for your trust and support.