Firefish step-by-step guide
We are proud to offer our members two innovative products:
- Firefish Cash - enables Borrowers to receive cash loans while using Bitcoin to secure them
- Firefish Earn - enables Investors to earn interest on their investment by providing funds for Bitcoin-backed 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 we proceed with contract setup process, during which the Borrower locks their Bitcoin collateral and Investor sends the loan notional to the Borrower. At maturity, the Borrower returns the funds to the Investor.
The below diagram outlines the whole process:
Firefish Cash
- Firefish Cash enables Borrowers receive cash loans and use Bitcoin to secure them
- 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).
- 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 value of collateral is 2x the size of the loan.
- If the value of your Bitcoin falls close to the value of the loan (due to a significant drop in the Bitcoin exchange rate), your Bitcoin will be sold on the open market, and the proceeds will be used to pay off the loan. This process is known as liquidation. The current liquidation level is set at 95% loan-to-value (LTV), meaning that if the value of your collateral gets to 95% of the loan amount, liquidation would be triggered to protect the lender's interests.
- You have the option to add more Bitcoin to the collateral to maintain a safe margin and prevent liquidation. Furthermore, if you are able to pay off the loan early, it eliminates the risk of liquidation entirely.
- In a highly unlikely scenario of a complete meltdown of Firefish infrastructure you have the ability retrieve your Bitcoin from the escrow. To do this, you can after a certain date in the future (the loan maturity date plus a specific buffer period, usually 1 month) broadcast a special recovery transaction that is at your disposal from the moment you setup your escrow.
Firefish Cash Step-By-Step
- If youβre interested in borrowing cash against your Bitcoin, click the β+β sign in the loan card or use the βBorrow cashβ button.
- Next, fill in the details about Amount youβd like to borrow and in which Currency. You can also specify the Preferred Loan Period (e.g. 3 months, 1 year) and provide us with any additional comments.
- After filling the form, click the βSubmit borrow interestβ button. You will see the details of your interest in the loan card marked as βPending interestβ. Firefish will process your interest and will try to match you with an Investor.
- Should you wish to cancel and amend your interest, simply click on the βCancel Interestβ button and submit a new one.
- Once Firefish matches you with an Investor, you can proceed to submitting your details. To do this, click βSubmitβ button next to βYour detailsβ step of the loan card.
- Fill in your mandatory contact details and click βSubmit your detailsβ. Note that these details are used for generating a Loan Agreement between you and the investor. At the same time, Investor will be provided only with your (anonymised) unique User ID and bank account details, to process the cash transaction.
- The next step is with the Investor who fills in the identical form and provides their details. Once done, you can proceed to confirming the details of the loan agreement.
- Double-check the loan details or alternatively click Back to details, if any edits are required. Finally, tick the respective boxes to agree with the Terms of Service and Loan & Security Agreement.
- Once Investor confirms loan details on their side, you can proceed to the Bitcoin Escrow setup process.
- First, due security reasons you will be asked to confirm your current firefish.io app password.
- Next, enter your Bitcoin return address. This address will be used to return your Bitcoin collateral at maturity (or after a default). Please note that this address canβt be changed during the lifetime of the loan!
- You can then proceed to the Bitcoin transfer. You can either use the embedded QR code or the below mentioned address. In that case, please make sure you transfer the exact amount of Bitcoin that is displayed in the βBitcoin amountβ field.
NOTE: In this step of the setup process, you are also able to download plain text recovery data, available under βInformation for advanced usersβ menu. This recovery data is a special Bitcoin recover transaction in case of a complete meltdown of Firefish infrastructure. If you can broadcast this transaction 1 month after the maturity your Bitcoin collateral will get sent back to your return address.
- After your Bitcoin transaction is successfully completed the next steps in the Escrow setup process will be conducted by the Oracles. In the mean time, you can safely return to the Dashboard.
- Once Oracle complete their duties a notification from Firefish will be sent to you and you can finalize the process by clicking βComplete setupβ.
- The final step is to confirm that you have received cash from the Investor. In such case, click the βConfirmβ button next to βPayment confirmationβ on your loan card.
- In the Payment confirmation window select the tick-box and click βConfirm fundsβ. This provides Firefish with a proof that the funds have successfully arrived on your bank account.
- You are all set! The loan card contains all details about your loan, as well as a link to loan documents and Bitcoin collateral details.
- Finally, just before the maturity, you will have access to βTransfer instructionsβ menu which provides you with all repayment details, including Investorβs bank account and the amount due.
- Once you repay your loan (i.e. send the amount due to the Investor), you can confirm the repayment in the following window by clicking βConfirm bank transferβ.
- Upon confirmation from the Investor, your Bitcoin will be returned and your loan is successfully closed!
πΒ Loan actions menu on the loan card enables a quick access to key actions related to the loan:
- View loan documents - access to loan agreement and loan confirmation
- Top-up collateral - start a collateral top-up process
- Save recovery transaction - download text file of the Bitcoin recovery transaction
- Request early repayment - submit a request to repay the loan before maturity
- Add maturity event to calendar - download .ics file to import loan maturity event into your calendar
β¬οΈΒ Collateral top-up is a feature that allows you to send additional Bitcoin to your escrow should you be willing to improve your Loan-to-Value (LTV) ratio, for example in an event of a margin call.
Please bear in mind, that this is the only way of adding more Bitcoin to your collateral. Any other approach, for example directly sending more Bitcoin to the escrow address, would result in loss of your Bitcoin!
To add more Bitcoin to your collateral, select the βTop-up collateralβ item in the Loan actions menu of the loan card. You will be guided through a similar process as during the Escrow setup phase (point 8 onwards of this step-by-step guide).
In addition, you will be able to input your preferred Bitcoin amount to top up or you can keep the recommended value, that is automatically calculated to get your LTV back to 50%. Based on your input, the Top-up amount menu will calculate your new liquidation price, collateral health indicator, as well as the new LTV.
Firefish Earn
- Firefish Earn enables Investors earn income by providing funds for Bitcoin-backed loans
- 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 on 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 (due to a decline in the Bitcoin price), 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.
Firefish Earn Step-By-Step
- If you have free cash and would like to invest it to earn an interest, click the β+β sign in the loan card or use the βInvest cashβ button.
- Next, fill in the details about Amount youβd like to invest and in which Currency. You can also specify the Preferred Loan Periods (e.g. 1,3 and 6 months) and your PMinimal acceptable yield (e.g. 6.5%). You can provide us with any additional comments.
- After filling the form, click the βSubmit investment interestβ button. You will see the details of your interest in the loan card marked as βPending interestβ. Firefish will process your interest and will try to match you with a Borrower.
- Should you wish to cancel and amend your interest, simply click on the βCancel Interestβ button and submit a new one.
- Once Firefish matches you with a Borrower, you can proceed to submitting your details. To do this, click βSubmitβ button next to βYour detailsβ step of the loan card.
- Fill in your mandatory contact details and click βSubmit your detailsβ. Note that these details are used for generating a Loan Agreement between you and the borrower. At the same time, Borrower will be provided only with your (anonymised) unique User ID and bank account details, to process the cash transaction.
- The next step is with the Borrower who fills in the identical form and provides their details. Once done, you can proceed to confirming the details of the investment.
- Double-check the loan details and tick respective boxes to agree with the Terms of Service and Loan & Security Agreement.
- In the next step, Borrower locks their Bitcoin collateral. One the process which might take a couple of days is finalized, you will be notified to transfer funds to Borrowerβs bank account. Details of the transfer are available when clicking on βTransfer fundsβ.
- Once you execute the funds transfer, you can confirm this by selecting the βI confirmβ tick-box and clicking βConfirm bank transferβ.
- You are all set! The loan card contains all details about your investment, as well as a link to investment documents and Bitcoin collateral details.
- Finally, at maturity, you will have access to βConfirm returnβ menu which provides gives you the ability confirm that Borrower returned your investment with interest earned (Amount due).
- Once you receive all the funds from Borrower, you can proceed to confirming the repayment by selecting the βI confirmβ tick-box and clicking on βConfirm repaymentβ button.
- Your investment is successfully closed!