Firefish App allows members to participate as Borrowers or Investors:
- Borrowers receive cash loans and use bitcoin to secure them
- Investors earn income by providing funds for such loans
There are two key steps in the process:
- Members submit Borrowing or Investing interests. These are non-binding and their purpose is to inform Firefish about a potential interest for borrowing or investing funds and the respective details, such as preferred amount, interest rate or period.
- Firefish matches borrowing and investing interests and updates the respective parties about the deal details. Only after both parties agree, a deal is closed and a formal contract setup procedure starts.
The below diagram outlines the whole process:
- To secure your loan, we require you to place your bitcoin in a designated multi-signature escrow address. This escrow can only be accessed in two ways: returned to your wallet (e.g. if you pay back the loan) or transferred to the liquidator's address (e.g. if you don't repay the loan by the due date).
- After a certain date in the future (the loan maturity date plus a buffer period), you can retrieve your bitcoin from the escrow and send it back to your private wallet without any further interaction with anyone. Even if the Firefish platform no longer exists, you will still be able to access your bitcoin.
- For the loan to be safe for both you and the investor, it's important that the value of the collateral always exceeds the value of the loan. The require initial Loan-To-Value ratio is 50%, which means the amount of collateral is 2x the size of the loan.
- If the value of your bitcoin falls close to the value of the loan (for example, due to a drop in the bitcoin exchange rate), your bitcoin will be sold on the open market and the proceeds used to pay off the loan. This process is called liquidation.
- You have the option to add more bitcoin to the collateral to avoid liquidation. You can also pay off the loan early at any time to avoid liquidation.
If you’re interested in borrowing cash against your bitcoin, click the “Borrow” button in the left-hand side menu of the app and select “I Want To Borrow”
Next, fill in the details about Amount you’d like to borrow and in which Currency. You can also specify the Preferred Loan Period (e.g. 3 months, 1 year, or a particular maturity date) and provide us with any additional comments (e.g. your preferred interest rate).
After filling the form, click the “Submit Loan Interest” button. You will see the details of your interest under “Pending Loan Interests”. Firefish will process your interest and contact you about the further steps.
Once your Loan is fully setup, i.e. your bitcoin is successfully locked in the Escrow and you received cash from the Investor, you will see the details of the Loan on your dashboard:
Once a Loan is closed - either successfully (cash with interest is sent to the Investor) or through a Liquidation (due to lack of collateral) or a Default (Loan not repaid at Maturity), a process managed by the Liquidator - the details of it will be displayed in the “Closed Loans” area.
- To ensure the security of your loan, we require the borrower to place their bitcoin in a designated multi-signature escrow address. You can easily track the activity of this escrow address using a public blockchain explorer.
- Your investment is always protected, as the value of the collateral exceeds the value of the loan.
- If the value of the bitcoin collateral drops close to the value of the loan (for example, due to a decline in the bitcoin exchange rate), the collateral will be sold on the open market and the proceeds used to pay back your investment. This process is called liquidation. Liquidation may also occur if the borrower fails to pay back the loan on the due date.
- You don't need to worry about handling, trading, or exchanging bitcoin yourself. You can choose to use a trusted third party, known as the liquidator, to handle the process of liquidation on your behalf. However, if you are comfortable working with bitcoin, you have the option to opt-out and act as your own liquidator.
If you have free cash and would like to invest it to earn an interest, select “Invest” in the left-hand side menu of the app and click the “I Want to Invest Cash” button.
Next, fill in the details about the Amount you would like to invest and in which Currency. You can also specify the Preferred Investment Period (e.g. 3 months, 1 year, or a particular maturity date), your Preferred Investment Rate and provide us with any additional comments.
After filling the form, click the “Confirm” button. You will see the details of your interest under “Pending Investment Interests”. Firefish will process your interest and contact you about the further steps.
Once your Investment is fully setup, i.e. the bitcoin is successfully locked and the Borrower received cash from you, you will see the details in your dashboard:
Once a Loan is closed - either successfully (cash with interest is sent back to you by the Borrower) or through a Liquidation (due to lack of collateral) or a Default (Loan not repaid at Maturity), in which case you receive your investment from the Liquidator - the details of the deal will be displayed in the “Closed Loans” area.