Who is Kvadrat For
2min
- Speculators. With our quadratic exposure, you can make outsized bets on BTC movement without risking much capital or outlaying significant funds. Kvadrat token (kvBTC) is an ideal vehicle for bullish short-term bets on Bitcoin price as you don't run the liquidation risk and can benefit handsomely if the price moves in the right direction. Quadratic payoff also means you can multiply your wealth n-fold if you correctly guess the short-term price movement.
- Hedgers. You can use Kvadrat to hedge your exposure and protect yourself from impermanent loss risk. Liquidity bakers who earn money providing funds to the XTZ/tzBTC pair pool on the Tezos blockchain face the so-called impermanent loss risk, which is quadratic (the more tezos price moves from the initial point, the higher the additional loss due to liquidity pool rebalancing). With Kvadrat, you can easily offset the Bitcoin exposure of your liquidity baking contract to minimize this risk: the nice feature of kvBTC is that it, by design, has a gamma of 2, and you can easily calculate how many tokens you need to hedge your BTC exposure with when liquidity baking on Tezos!
- Yield Farmers. Selling kvBTC short allows you to collect the premium in a way that is similar to premium harvesting when selling options. Kvadrat sellers enjoy the so-called funding rate, which is paid to them by the longs daily. The funding rate is the difference between the spot tzBTC² price and the so-called "mark price", which is determined by the balance between Kvadrat token supply and demand. Generally, the funding rate is quite attractive as the risk Kvadrat token sellers take on exceeds that often sellers.
