AMA Recap: BRIDGE Finance

Section 1: The Selective Questions

Uniswap Detective :
Welcome Cosmas @cosychiruka, and Andy @andrew_bfin. It’s a pleasure to have you guys join us here in The Selective

Your project is looking really great so far, and especially our admin @crypto_mission has really taken an interest in it. I’m looking forward to exploring it with the group today.

Cosmas C :
We are looking forward as well. Glad to be here. Ready to tackle all questions :)

Q1) : Walk us through the main goal of Bridge, what is it that you guys are hoping to accomplish with the platform?

Cosmas C :
The main goal for us is to break the barrier that limits funds from flowing from one market to the other, financial derivatives are meant to do just that, give people access to certain financial benefits that were normally beyond reach. Bridge Finance aims to allow traders to have access to both markets without any hastle.

Uniswap Detective :
And you’ll be doing this through a swap function right. For those of us who haven’t been in a finance class for a while, can you briefly explain what a swap actually is?

Cosmas C :
Sure. Its a financial contract basically, where parties agree to swap future gains to an asset, based on how the asset performs. For it to be valid the parties have to agree to the value of the asset, this is called the notional. Then they have to agree on the duration of the swap, as well as the cost to create the contract.
Its basically selling rights to an asset (stock in our case) to another party.
So when the asset rises in value, the taker owns the rights to those profits, if it falls he also owns the losses.

On maturity, settlement is then processed by a neutral party to distribute the profits or losses appropriately

Usually this is the role of a clearing house, but thanks to crypto, smart contracts are ideal for exactly this purpose

Uniswap Detective :
Ok, so the actual process is pretty simple and made doable and secure via smart contracts.

So the platform will ultimately give the crypto user access to stock market exposure, without having to move out of the crypto-sphere at all?

And likewise, give stock owners exposure to the crypto world, while still holding their stocks?

Cosmas C :
Yes precisely, it will give you exposure to the markets without having to move the funds or actually buy the stocks. Likewise for the stock owner, they still own their stock! They only get SBL (security based loan) in the form of tokens with which to then enter the crypto market.

Uniswap Detective :
Great, I like the concept and can’t see many other platforms trying to do this so you are really a first mover it would seem.

Q2) I understand that you will be particularly targeting stock-trading app users, from platforms such as Robinhood or Acorns — what is it about these users that makes them a good fit the Bridge?

Cosmas C :
On that there are two things to point out:

1. The users of this platform are the new generation (millennials and Gen Z), almost all trade both markets, have a higher risk appetite, and have totally different needs for their financial freedom compared to the previous generation. This need for ultimate trading freedom, something that we are trying to address, which leads us to point two.

2. Security Based Loans don’t exist for retail stock traders, yet they exist for traditional stock owners. If you buy a stock from Robinhood you cant use it to get a loan to invest in other markets (like crypto). Yet you own a asset. But in crypto if you own a token you can get a loan against it / unlock liquidity from it. This is a big inconsistency, which we are trying to tackle. This makes them an ideal fit as we are giving them access to something they should have had a long time ago

Uniswap Detective :
Right, so there has large demand but now more than ever, the target market is suited to something like the platform you’re creating with Bridge.

It also gives stock traders the opportunity to use their investments as collateral for loans which they currently cannot do.

What has been preventing stocks, from these apps, being used as collateral for swaps / loans in the past?

Cosmas C :
Brilliant question!

Before, or right now as things stand, when you buy a stock through RobinHood, you are actually buying a fragment of a stock. Robinhood holds all the documentation for proof of ownership on these stocks. They buy them in bulk and break them into smaller pieces for their clients to then buy pieces of. But they will give you no certificates and paperwork that is recognizable to banks as proof of asset ownership.

So our value proposition to these brokers is that, we have a new value addition service which they can introduce to their clients. Hedging. This makes the customer experience richer on the stock trading apps. Its not a hard sell if you sell it right. The brokerage firms also are in need of hedging during certain seasons.

Uniswap Detective :
Ok thanks for the explanation. For myself like many others in crypto I’m not fully aware of how the stock market operates in detail to that’s very interesting.

Q3) Alright, can you now quickly walk us through the process of entering into a swap on Bridge, for both parties? Also, maybe you can touch on the role of the broker.

[Andy takes this question]

Andy :
We designed the process to be the simplest in existence.

Step one — stake the amount equal to the value of your stocks, as collateral to guarantee payment.

Step two — go to the swaps page and create a swap contract like you would any post on any social site, but entering the specifications of your contract.

Step three — list it. The system checks if you have staked enough collateral to guarantee payment before it creates your contract. If you don’t have enough it will prompt you to stake the balance first.

Once created it will appear on the main timeline for all takers to see.

3 easy steps!

The brokers role is only to advance BFR tokens to the stock owner or Maker, that’s it.

Uniswap Detective :
Great, nice simple explanation. Thank you Andy!

What if, say, as a crypto user : I want to have a massive stock position. How will this be dealt with on the platform, if there are only small swap contracts currently listed by the Makers?

Andy :
The Brokers tab is meant to address this. We want to create a market place where brokers can also bring certain portfolios of stocks they want to hedge, and offer them to retail traders. If you are looking for such sizable stock portfolios to buy you can find them here.

Q4) What sort of system is in place to act as a safeguard for payments, in case the collateral is exceeded?

Andy :
To protect parties during a contract tenure, stop out contingencies are built into the system on all levels, this is to protect the funds of both parties, and insure that whoever stood to be paid from the collateral gets paid.
If the value of the stock rises or falls by 90% the system automatically stops both parties out of the contract and makes a settlement call to the smart contract.

The maximum a stock can lose is 100% after all so at 90% whilst there’s still enough funds to cover it, we close it.

But if somehow it doesn’t close in time, we have the vault for that acting as a guarantor.

Uniswap Detective :
Alright, that makes sense, and while we’re speaking of payments — what happens if the price of the BFT token increases or decreases during a contract period?

Andy :
This is a possibility which affects both parties equally, that’s the good part. If it gains both parties walk away with more than they bargained for.

But if it losses, the taker feels it more, as the system measures the USD value of collateral, and also stops you out automatically if the price fall makes it in a way that anymore falling you won’t make payment/settlement.

Q5) Let’s move onto competition and the future prospects of the project. As we discussed, you’re the first mover for this particular niche — but do any projects come to mind as a comparison?

Cosmas C : We have been compared to Deus a lot, but we believe we have a lot of differences with them, we used financial derivatives whilst they dont. Our approach is quite simpler even for novices theirs is quite complex. We are a bi-directional solution, they are not. But all competition is good competition as it improves the space.

Uniswap Detective :
Yea, I believe that if you do not provide a product that is simple to use then it’s going to be extremely hard to get traction in this market.

That’s another reason why apps like Robinhood etc have done very well for example.

Q6) Perfect. I think we have covered the basics of the project. Can you give us a little overview of the team, as they’re not anonymous? What sort of relevant experience do you guys have?

Cosmas C :
I’m a banker by profession and a self taught full-stack web developer by passion. I’ve worked in banking for 9 years starting from Tetrad Investment bank and moved to Atlasmara and DeVeres over the years. Dealing with all sort of financial instruments I’m well versed in that area. So I’m combining both worlds here finance and coding

Andy :
For me I’m a 10 year software veteran with Microsoft and Linksys from my early years, then recently, the past 3 years I’ve been diving into blockchain development facing Corda, Quorum, Solidity etc. I also worked at Credit Suisse as a senior blockchain developer, and have been working on a lot other side projects since

Cosmas C :
Then to touch on the other guys, they are all developers, one is specialized in FinTech solutions at the very top level and helps makes sure the standards are top notch. The other is specialized in security and efficiency. That’s a well balanced team.

Q7) Finally, just so everyone knows : give us the info on your expected release schedule, when will the pre-sale be, what are the details, and when can we expect to see the application in-action?

Cosmas C :
Okay, just to brush through, for the first 18 months about 2,5 million tokens will be in circulation.

The team tokens and seed investor tokens have a 18 month cliff and a 10% monthly vesting starts after.

On the platform, what you see on the Alpha right now is what you will get, its just the same skeletal stricture and we are just going to unlock or add more features to it.

please try it out at https://alpha-bridgefinance.net to get a feel

Uniswap Detective :
Thank you guys so much for joining us. I know you are both very busy but this really helps our community to understand your project in more depth to make better decisions.

I know we have gone over time here but I hope you can stay for a few more minutes just to see if there are any further questions.

Section 2 : Audience Questions

DJA :
1) Why would a maker loan out their stock, instead of selling and rebuying at a later stage, or even selling and shorting the stock? In the perspective of a taker, isn’t it easier if they buy the stock they want instead of loaning it? Apologies if I misunderstood something or I’m mixing up the terms.

2) Since stocks and equities are highly regulated, are there any legal hurdles and regulations to overcome before your platform goes live?

Cosmas C :
Hi DJA, the maker is the one who is the stock owner, they are the ones who loan out the stock.

The idea is they want to still own their stock, but also want to get exposure into crypto. Hedging means you are not ready to sell but just guard against the risk

Mission :
Something I was wondering during the AMA was if you guys have reached out to potential stock trading apps for adoption yet? Have you started a dialogue with Robinhood, or a similar company?

Cosmas C :
Hi, we are working under the wings of DeVeres trading platform and we are going to leverage them to creep into the asset management and stock trading space. They will try it out first before we jump to bigger prospects