Frequently Asked Questions
General
Firefish is a bitcoin-backed lending platform where members can participate as Borrowers or Investors, utilising Firefish Cash or Firefish Earn products respectively.
- Borrowers receive cash loans and use Bitcoin to secure them.
- Investors earn interest on their investment by providing funds for such loans.
At Firefish, the members are in control. Different to centralised lenders, many of whom have recently collapsed, Firefish does not have access to Bitcoin collateral - it is never touched, traded or exchanged. Instead, it is securely locked in a smart contract built on top of the bitcoin network.
You don't have to worry about Firefish's solvency or reputation either - we only provide the technology for secure interaction between borrower and investor, and we never have access to members' funds.
Firefish is a peer to peer platform where loans are provided on bilateral basis between our members - Borrowers, holders of Bitcoin and Investors, holders of cash.
Firefish offers technology for secure interaction, escrow and settlement.
Our platform is currently in a Beta mode, primarily available for our members from EU. We invite all fellow bitcoiners and self sovereign investors to take part.
The next release of Firefish will be available after we finalise development of certain elements of the platform. Our ambition is to launch the next version in Q3/Q4 2023.
Firefish has global ambitions as we believe bitcoiners from around the world could benefit from its many features. We are exploring opportunities for launch in many other markets. We will keep on updating the global Bitcoin community as we progress with the new releases and additional markets.
In the current Beta mode, Firefish doesn’t charge members any origination or other fees.
Firefish is a Bitcoin-native platform. We have no plans to expand our crypto coverage and are focused solely on providing the best service to bitcoiners.
Firefish Cash
Firefish Cash enables Borrowers to receive cash loans and use their Bitcoin to secure them.
Long-term Bitcoin holders may encounter situations where they need funds for investment opportunities or significant life events. Similarly, professionals with Bitcoin on their balance sheets might seek additional leverage, exposure, or a means to cover operational costs. Rather than selling their Bitcoin holdings, they can explore a Firefish loan, enabling them to maintain their Bitcoin exposure and potentially benefit from future capital appreciation.
Furthermore, by retaining their Bitcoin, they can avoid capital gains tax implications.
Currently CZK 50.000, USD 2.000, EUR 2.000. Please, contact us directly for higher amounts.
Currently CZK 2.000, USD 100, EUR 100.
Czech koruna (CZK), US Dollar (USD) and Euro (EUR).
Currently not, but we do plan to introduce stablecoins in the future.
Interest rates on Firefish are driven by supply and demand from the members.
No problem! We would cancel your deal with no strings attached.
To secure a Firefish loan, Bitcoin collateral is locked using a 3-of-3 multi-signature contract, providing a high level of security and preventing unauthorized access. The collateral is designed to only move under specific predefined conditions, such as loan repayment.
The escrow address, where the collateral is stored, is generated through code executed within the borrower's web browser. Firefish subsequently verifies the accuracy of this code-generated address.
Your Bitcoin remains secure in a multi-signature escrow address, with no party having access to it. It will only be released back to you (the borrower) upon loan repayment or to the investor in the event of non-repayment or if your loan-to-value ratio exceeds 95%.
The duration of the process can vary, typically taking a few hours. This timeline depends on how promptly you provide your details, send your Bitcoin, and how quickly your transactions are confirmed (mined) on the blockchain.
Your Bitcoin is initially sent to a 'pre-fund' address, specifically used to consolidate UTXOs (Unspent Transaction Outputs) into a single address. Subsequently, it is transferred to the 'escrow' address, where it remains securely locked for the entire loan duration.
An additional address receives a minimum amount of Bitcoin. This address serves a vital role for Firefish: in instances when blockchain confirmation fees become prohibitively high, potentially causing delays in the confirmation of the escrow transaction, Firefish employs a 'child-pays-for-parent' (CPFP) transaction. This approach boosts the blockchain fees, expediting the confirmation process when necessary.
There are two scenarios:
- You never send your Bitcoin - in this scenario, we would cancel the transaction, removing it from the platform. We strongly advise against sending any further Bitcoin to the escrow address. Doing so could result in the loss of your Bitcoin.
- You send your Bitcoin but never finish the process - in this situation, your Bitcoin remains at the 'pre-fund' address. If you discontinue the process and fail to complete it, your Bitcoin will be returned to you two weeks after the first confirmation of the pre-fund transaction on the blockchain.
No, please do not use RBF to expedite the process. If there is a sudden increase in blockchain fees, Firefish will use a 'child-pays-for-parent' (CPFP) transaction to increase the fees and accelerate the process.
It is technically possible to send both more or less Bitcoin than the platform proposes, with the following potential outcomes:
- Sending more Bitcoin - by providing additional Bitcoin as collateral, your loan becomes more secure. This results in a lower loan-to-value (LTV) ratio and liquidation price. Essentially, it enhances safety and reduces the risk of liquidation due to a decline in Bitcoin's price.
- Sending less Bitcoin - you will receive a warning message (Underfunded), and we will contact you with further instructions on how to resolve the issue.
Borrower.
Your Bitcoin will be sent to your return address within 48 hours after the investor confirms they have received their investment (Amount Due) back.
Please, contact us.
After finalizing the setup process, the return address cannot be changed. If you have used an incorrect address, please contact us for assistance.
Please, contact us.
You can monitor the status and health of your collateral for all your loans on the platform using the 'Collateral Health Indicator' (CHI).
LTV, or Loan-to-Value ratio, is a financial term that represents the ratio of a loan to the value of the collateral. The initial LTV (e.g., 50%) is used to determine how much Bitcoin needs to be locked in the escrow contract to secure a specific loan amount.
For instance, to achieve an LTV of 50% for a $10,000 loan, you would need to deposit $20,000 worth of Bitcoin. If Bitcoin's price is $25,000, you'd deposit 0.8 Bitcoin (0.8 BTC * $25,000 = $20,000), resulting in an LTV of 50%.
If the LTV reaches 95% during the loan term, the collateral is automatically liquidated to repay the loan and return the proceeds to the investor.
CHI, or Collateral Health Indicator, is a metric used on the Firefish platform to assess the sufficiency of collateral securing a loan. The higher the CHI value, the healthier the collateral position.
A CHI of 100% signifies a fully healthy status, indicating that you have sufficient collateral as recommended by Firefish. However, as the CHI approaches 0, it's advisable to consider adding more collateral to avoid potential liquidation. When the CHI reaches 0, the collateral is subject to liquidation.
Liquidation is a process that occurs when the value of Borrower's collateral does not sufficiently cover the value of the loan due to a decline in the price of Bitcoin. In this case, the collateral is automatically sent for liquidation and the proceeds are then used to pay off the loan.
There are two scenarios for liquidation:
- Borrower doesn’t repay their loan at maturity - the collateral is transferred to the liquidator, who then sells a portion of the collateral to settle the outstanding loan amount. The remaining Bitcoin is returned to the borrower, with the liquidator retaining a 5% liquidation fee.
- 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.
In the current release, investors themselves function as the liquidator, meaning they receive the collateral when a liquidation event occurs.
We are developing a feature that will allow for a third-party liquidation process, where a separate entity would handle the sale of Bitcoin and return the funds to the investor.
If the price of Bitcoin falls to a predetermined liquidation level, it triggers a liquidation event, and the collateral is liquidated.
Liquidation price equals loan-to-value (LTV) of 95% and collateral health indicator (CHI) of 0%.
Liquidation can occur if the price of Bitcoin reaches a liquidation level (price liquidation) or if you fail to repay your loan at maturity (default).
The value of your collateral should always remain above an LTV of 95%. It's essential to maintain an adequate amount of collateral. If the price of Bitcoin experiences a significant decline, we advise you to consider either topping up (i.e., sending more Bitcoin) using the platform's designated process or repaying your loan.
No. Partial loan repayment currently doesn’t impact your loan-to-value (LTV) ratio.
We will be introducing support for partial repayments in the future.
A margin call is an event which is triggered when your LTV hits a pre-defined level. There are 3 margin calls: at LTV 80%, 85% and 90%. If your LTV reaches any of these levels, you would receive an email notification.
In an ideal scenario, you would choose top-up your collateral though the platform or repay your loan. Please bear in mind, that the loan repayment process might take longer, and if the Bitcoin price continues to decline rapidly, there's still a risk of liquidation.
Currently we do not support excess collateral withdrawal.
We are planning to introduce this process in the future.
You have the flexibility to make edits to your details before final submission by clicking on the "Back to details" buttons in the Loan Details section of the process.
If you have accidentally submitted incorrect details, please contact us.
The time it takes for you to receive your funds depends on when the investor made the fiat transfer and the speed of transaction processing. Typically, you should receive your funds no later than the loan's start date.
For EUR SEPA and local CZK payments, the transfers usually take from intraday to 1-2 days. SWIFT payments might take a bit longer, possibly a few more days.
Firefish would start a resolution procedure as defined in the Escrow rules. If the resolution process ultimately confirms that you never received the funds, your Bitcoin will be unlocked and returned to you.
We would cancel the deal and try to match you with a different investor as soon as possible.
Your loan should be repaid to the investor no later than the maturity date. It's advisable to initiate the transfer a few days before the maturity date to ensure timely repayment.
You should return the “Amount due”.
Amount due = Loan amount + Interest
Firefish would start a resolution procedure as defined in the Escrow rules. Part of your collateral might get liquidated to cover the full amount.
Firefish would start a resolution procedure as defined in the Escrow rules. If the outcome of the procedure is deemed a "default," your collateral will be liquidated to cover the outstanding amount.
Firefish would start a resolution procedure as defined in the Escrow rules. If the outcome of the procedure is deemed a "default," your collateral will be liquidated to cover the outstanding amount.
Yes, you can repay the loan earlier. To do so, please select the "Early repayment" option in the Loan amount menu. We will then seek confirmation from the investor to confirm the successful repayment of your loan.
When repaying your loan earlier, you will need to repay the entire amount due for the entire period of the loan.
Firefish would start a resolution procedure as defined in the Escrow rules. If the resolution procedure results in us receiving only the confirmation of repayment from you (the borrower), we would consider the loan closed, and your collateral would be returned.
Please, contact us if you need to change the bank details.
Firefish Earn
Firefish Earn enables Investors with free cash to earn interest on their investment 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 Earn investments are backed by Bitcoin collateral that is always higher than the amount of the loan, therefore the credit risk for Investors is completely minimised.
Along with borrowing, Firefish allows its members to invest money in secured Firefish loans in a very direct and easy way. No trading, cryptography or blockchain skills are required.
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.
No. Full stop. Investing with Firefish is easy, you do not need to interact with Bitcoin or blockchain, all complexities are handled by Firefish.
Interest rates on Firefish are not set by us, instead they are driven by supply and demand from the members. Check our Platform or contact us for the actual rates.
No. Because the value of the locked Bitcoin is always higher than the loan itself, the possibility of a default and you losing your investment is completely removed.
If the Borrower doesn’t pay back their loan, Bitcoin collateral is liquidated and you receive your funds back. The return of your investment is guaranteed.
Your investment and interest will be returned to your bank account on the maturity date of the loan.
In the event of a Borrower’s default, Firefish will automatically liquidate the Bitcoin collateral and return the investor's entire investment and interest earned.
Firefish Protocol
Firefish protocol is a set of rules designed to facilitate a loan contract between Borrower and Investor, and use Bitcoin collateral to secure it. The Bitcoin network is used to enforce such rules.
Check out more details about the Firefish protocol and its security model in the Firefish Protocol section of our Document Hub.
Unlike centralised custodial lenders we do not rely on trust when it comes to security. Firefish protocol is secure by design.
We invite you to learn more about the protocol, its assumptions and potential risks in the Firefish Protocol section of our Document Hub.
To secure a Firefish loan, Bitcoin collateral is locked through a 3-of-3 multi-signature contract which ensures safety and prevents anyone from accessing it.
The collateral only moves when a set of predefined criteria, such as repayment of a loan, are met.
The escrow address on which the collateral is stored is generated by the Borrower themselves.
In general, Oracles are systems that connect data from the outside world (off-chain) with the blockchain world (on-chain).
Firefish protocol requires two kinds of off-chain data: the current Bitcoin price; and confirmation of fiat payment.
Oracle services are in the current release provided by Firefish.
With Firefish, Investors can appoint a third-party to act on their behalf in case of a liquidation or loan default. This allows them not to worry about handling cryptographic material, such as private keys or about interacting with exchanges.
Liquidator is legally empowered to act on behalf of the Investor and sells Bitcoin collateral on the open market for cash. Proceeds are then used to fully repay the investment.
The current version of Firefish assumes self-liquidation, which means that collateral in case of default or liquidation is sent to the Investor.