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We are Itchy Sats and we bring peer-to-peer derivatives trading to Bitcoin.
We are Itchy Sats and we bring peer-to-peer derivatives trading to Bitcoin.
CFD (Contract For Difference) trading is a surging market in Crypto. Modern centralized exchanges such as Bitmex have realized that the best collateral for CFDs is Bitcoin.
The problems with centralized exchanges are manifold: sign-up procedures are tiring, depositing funds takes a long time and withdrawing is expensive. Even more importantly, you have no guarantees that you will receive your funds back for sure. In fact, central exchanges are purely built on trust - trust which has been misused more than once in the past. Mt.Gox anyone?
We are Itchy Sats and our mission is to bring crypto derivatives trading to Bitcoin, in a pure, peer-to-peer way. No deposits, no withdraws, no accounts, no middleman. Trustless, peer-to-peer and powered by cryptography.
How it works
The technology which enables us doing so is called Discreet Log Contract, or short DLC. The approach is very similar to the Lightning Network in the sense that two parties lock up funds in a multi-sig and agree on how the money should be distributed at a point in time in the future. In our CFD example it works like this:
There are two parties to a CFD contract, one who goes long, and one who goes short. Let's call them Alice (who goes long) and Bob (who goes short respectively). Alice and Bob lock up 1BTC each at the current rate of $60k/BTC. If the price appreciates, Alice will receive parts of Bob's BTC and if the price will go down, Bob will receive part of Alice's BTC.
If the two parties collaborate they can settle at any time on an agreed exchange rate. If the parties don't collaborate (because one is unresponsive) then the Bitcoin blockchain serves as settlement layer. An Oracle periodically attests to the BTC/USD price at defined points in time. This determines how much Alice and Bob will receive from the CFD contract. It's that simple
Status
We are currently in a beta testing phase. So please join us on our journey to bring CFD peer-to-peer trading to Bitcoin. Have a look at itchysats.network and follow us on Twitter
Cheers
Itchy Max and Scratchy
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❤️ goes to the COMIT-guys who are doing the heavy lifting of building a stable DLC protocol