Loka is a Meta Layer with Native Yield Protocol for Bitcoin that accrues value from the Bitcoin mining economy.

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How does Loka work?

There are 3 infrastructure pillars in Loka ecosystem:

1. Decentralized Mining Pool (DMP)

This is where Bitcoin miners send their hashrates, which are then pooled and sent to the network.

In a typical FPPS centralized mining pool, the pool owner provides liquidity to pay miners their bitcoin reward upfront (even if the pool doesn't find any block) and charges pool fees from the mining reward (when a block is found).

In Loka DMP, anyone can provide liquidity and the fees are distributed to liquidity providers based on their contribution.

2. Loka Bitcoin Liquidity Pool (LBLP)

This is where:

• Liquidity Providers put their Bitcoin to pay miners upfront in exchange for lokBTC as a liquid LP token.
• Trove holders/investors can borrow against their Trove and get lokBTC and use it or redeem it for native Bitcoin, and LPs can lend their lokBTC for extra revenue in the Loka Dapp. There's a fee applied on both opening/closing loans that is circled back to LBLP, providing extra yield for the lokBTC holders.
• Daily mining rewards for Bitcoin miners that connect to DMP are paid from

The total circulating supply of lokBTC is rebased every 24hrs to sync the 1:1 ratio to the Bitcoin Total Value Locked in the pool.

3. Permissionless Forward Hashrate Marketplace (FHM) Protocol

This is where investors can purchase future mining rewards from Bitcoin miners at a discount rate in the form of a forward hashrate contract.

Miners (or insurers) need to provide collateral in BTC 1:1 to the value of the contract.

This collateral is released linearly every day until the contract expires to guarantee the hashrate delivery according to the contract.

By selling their hashrate for a locked period of time, Bitcoin miners have several benefits:

• Early capital return on their hardware investment that they can use to buy more mining machines
• Hedge against the price volatility risk of Bitcoin by locking in their revenue upfront

From the perspective of investors, buying forward hashrate contracts provides these benefits:

• Investment in Bitcoin mining activity without having to deal with operational complexity and high capital requirements
• It's the same as buying Bitcoin at a price lower than the market price directly from the mining reward.
• Since Trove is tokenized and collateralized, it can provide instant liquidity in DeFi.

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