xBTC: In-depth Project Analysis

Reimagine Digital Assets, Revolutionize Finance

Project Overview

Two prominent solutions for-protecting capital investment in volatile markets such as Digital Assets are hedging and indexing. Although there are various financial instruments available that offer these features separately via options and index funds, a single financial instrument that provides the benefits of a viable hedge and growth index fundis still not available. xBTC is a product created by Social Capital that uniquely combines both hedging and indexing in the digital asset space. Instead of hedging against Bitcoin’sprice, xBTC allows holders to access a synthetic hedge against Bitcoin market cap dominance (BMCD) through a term known as “Dominance Hedge.” xBTC is a rebasing token that is pegged to BMCD. In simple words, xBTC is a synthetic hedge against Bitcoin’sdominance.

What potential value could there be for such an instrument?

Bitcoin, as the first cryptocurrency ever created, will always be at the forefront of the decentralized ecosystem, however, as the industry evolves, new crypto projects joining this ecosystem will inevitably reduce Bitcoin’s dominance. In many ways, Bitcoin is now a limited and inferior technology compared to the new innovative solutions that are being created with extremely profitable and successful value propositions. We have a current ecosystem where the combined Altcoin ecosystem boasts billions of dollars in market cap, hundreds of millions in profits and firm partnerships with multinational corporations. We have seen major growth in DeFi, gaming, social networks and much more. These other digital assets are changing the face of finance, commerce, business, and technology beyond imagination.

Synthetic Dominance hedge against Bitcoin

Bitcoin market cap dominance BMCD-xBTC: In-depth Project Analysis- tradedog.io

This is a primary reason why BMCD has seen continuous depreciation in the last few years and why it will likely continue. In the last bull run in 2017 Bitcoin Dominance fell to 30% and that was when many altcoins were just whitepaper and vaporware. Taking this into consideration it would stand to reason that an indexing instrument that tracks the growth in altcoin markets and at the same time provides diversification would likely provide value to savvy investors.

xBTC uses the “rebasing” model to adjust the token supply of the entire market, and all holders’ wallets through pegging its price to Bitcoin’smarket cap dominance (BMCD). If the dominance goes down, more supply is
released to increase all wallet holdings (Positive Rebasing)that probably helps in price appreciation. If BMCD goes up, supply is extracted from holders’ wallets (Negative Rebasing) that probably causes price appreciation.

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