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Investing in Bitcoin-backed Loans

What is Firefish Invest?​

Firefish Invest enables Investors with available capital to earn interest on their investment (fiat or USDC stablecoins) by providing funds for Bitcoin-backed loans. These funds are sent directly to Borrowers who return them upon maturity of their loans, along with accrued interest.

Firefish investments are backed by Bitcoin collateral which always needs to be higher than the loan amount due with an LTV ratio of 95% - if this condition no longer holds, the collateral is liquidated to cover the investor.

Is investing through Firefish risky?​

Every loan on Firefish is over-collateralized — the value of the locked Bitcoin is always higher than the loan itself (LTV is 50%). This structure minimizes the risk of loss for lenders.

If the Borrower doesn't pay back their loan, Bitcoin collateral is liquidated either via a 'Self-Liquidation' or 'Firefish Liquidation' process (please see below for further details about the liquidation processes).

How much can I earn investing on Firefish?​

Interest rates on Firefish are driven by supply and demand from our users, however in general the rates are higher than standard money market instruments.

Check our Platform or contact us for the latest rates.

How is my investment protected?​

Your investment is protected by Bitcoin collateral. Its value is always higher than your investment. By default, Borrowers lock 2x the amount of your investment.

E.g. for a EUR 1000 loan with EUR 60 as the interest, a Borrower would lock EUR 2120 worth of Bitcoin collateral.

If the value of collateral significantly declines due to a decline in the price of Bitcoin, the Borrower would be asked to top up additional collateral. Alternatively they can opt to repay the loan.

In the event they fail to do so and the price reaches a liquidation level, the Bitcoin collateral will be liquidated and your investment covered with the proceeds. The same applies to a situation where the Borrower fails to repay their loan at maturity.

What is the maximum amount I can invest?​

Your limits depend on your account verification tier. The current limits for your tier are always shown on the platform under your account settings. As a guide:

  • ZERO - account not yet verified; you can browse the platform but cannot borrow or invest.
  • BASIC - EUR 15,000 per transaction and EUR 30,000 in total.
  • INTERMEDIATE - a monthly limit and a higher total limit (currently EUR 50,000 per month and EUR 150,000 in total).
  • PRO - custom limits based on your borrowing and investing needs.

Limits are counted in EUR equivalent across all your open loans, investments and pending requests combined.

What is the minimum amount I can invest?​

The minimum amount depends on the currency and is shown on the platform when you accept an investment.

Do I need to own Bitcoin or crypto to invest?​

No. Investing with Firefish is easy; you do not need to interact with Bitcoin or blockchain.

Your only role is to send funds (banking money or stablecoins) to the Borrower before the start of the deal and confirm the repayment of the investment at maturity.

How much does Firefish charge for the service?​

For marketplace investments, the origination fee is applied to Borrowers only.

Investing through Auto Invest includes a markup on the price of the assigned loan claims. See the Fee Schedule and the Auto Invest documentation for details.

How do I invest on Firefish?​

In addition to borrowing, Firefish allows its users to invest money in secured Firefish loans directly and easily. No trading, cryptography, or blockchain skills are required.

For Investors, there are two ways to interact with the platform:

  • Loan Marketplace – displays all available deals that haven't been matched with an Investor. Investors can select any of the available deals and accept the opportunity.

    Once the opportunity is accepted, the Investor confirms the details, and the deal is then passed to the Borrower to lock their Bitcoin collateral.

  • Watchdog – an email notification service that enables Investors to receive investment opportunities directly in their inbox. Watchdog allows Investors to customize their preferences for currencies, minimum and maximum loan amounts, interest rates, and loan periods.

    When a Borrower submits a new loan request, all Investors whose preferences match the loan parameters receive a notification. They can accept the deal from the "Your current Watchdog offers" section above the Loan Marketplace. The request is also listed in the marketplace.

Once the collateral securing your investment is locked, you will be asked to transfer the funds directly to the Borrower's bank account. You will receive your investment and accrued interest on the maturity date.

How and when is my investment paid back?​

Your investment and interest should be returned to your bank account by the maturity date of the loan.

Alternatively, the Borrower can request an early repayment of the whole amount and interest.

What if the Borrower doesn't return the money?​

Firefish would first start a "Resolution Procedure", as defined in the Collateral Escrow Rules. The aim of the procedure is to clarify what happened with the bank transaction: whether the money was sent back to the Investor and whether they received it.

In the event of a Borrower's default a liquidation process is triggered. The collateral gets liquidated either via a 'Self-Liquidation' or 'Firefish Liquidation' process.

When would the collateral get liquidated?​

Liquidation of collateral can occur in the following two scenarios:

  • Default - Borrower doesn't repay their loan at maturity: Bitcoin covering the amount due, default interest of 15% p.a. for the additional period after maturity, and a liquidation premium of about 5% is used to settle the loan. The remaining Bitcoin is returned to the Borrower. See the Loan and Security Agreement, sections 5.1 and 5.3.
  • Price Liquidation - Bitcoin price reaches liquidation price: in the event of a significant decline in the Bitcoin price that reaches the liquidation threshold, and if the Borrower neither adds more collateral nor repays the loan, their collateral is transferred to the liquidator. In this scenario, the liquidator retains the entire collateral amount.

For price liquidation, the actual level for each loan is displayed on your loan card as 'Bitcoin liquidation price'.

Who is a liquidator?​

There are two modes for the liquidation:

  • Self-liquidation - Investors set their own liquidation address during the deal setup process. In the event of liquidation, the entire Bitcoin collateral is sent directly to this address and the Investor handles the Bitcoin themselves. There is no liquidation fee.
  • Firefish liquidation - Firefish manages the collateral liquidation process. Investors receive their investment (the amount due) back in the loan currency, and Firefish retains any remaining value of the liquidated collateral. This mode allows Investors not to worry about handling cryptographic material, such as private keys or interacting with exchanges. See the Terms of Service, section 12.3.

What is a liquidation price?​

If the price of Bitcoin falls to a predetermined liquidation level, it triggers a liquidation event, and the collateral is liquidated.

The liquidation price equals a loan-to-value (LTV) of 95% and collateral health indicator (CHI) of 0%. The liquidation price is available in the loan details on the platform.

How do I set up my preferred liquidation method?​

It is possible to choose a liquidation method for each deal during the investment setup.

Please bear in mind that it is not possible to change the liquidation method for live deals and deals that are in or past the Bitcoin collateral locking process stage.

What if the liquidation price is reached for only a couple of seconds and the price later moves back?​

Any drop below the liquidation price within the period examined by the Price Oracle is considered a liquidation event, even if the price later recovers. See the Collateral Escrow Rules, article V.