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

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Who are the participants in Loka Ecosystem?

1. Liquidity Providers

This could be anyone who wants their Bitcoin to grow by bridging their native BTC to Loka, which is locked in the Bitcoin Liquidity Pool, and receiving lokBTC as the liquid LP token that is always redeemable or bridged back 1:1 to BTC.

lokBTC is rebased every 24 hours with the dynamic APR (maintained at a minimum of 8%) from the native yield.

This means that by holding and using LokBTC in the Loka layer, your Bitcoin is growing by itself.

LPs can also provide loans to investors (trove holders) and generate extra yield on their LokBTC at a relatively low risk because the collateral itself grows in value from the mining reward.

2. Investors

Retail or institutional investors can purchase forward hashrate contracts from Bitcoin miners (called Trove) in $ stablecoin.

Holding a trove means having the right to a specific amount of hashrates produced by miners over a period of time, and receiving the Bitcoin mining reward from the hashrates on a daily basis.

<aside> 💡 Purchasing a trove is like buying Bitcoin at a discount.

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Trove is monitored by the Loka protocol and fully collateralized with 10% of the fund added to the collateral, which means:

• The protocol checks the last 24 hours to ensure that the hashrates produced are according to the contract;
  • If yes, then the mining reward will be delivered to the investor
  • If no, then 1/n contract-day Bitcoin collateral will be slashed and delivered to the investor
• There are no counterparty risks. In an extreme scenario where miners shut down their machines on Day-1 of the contract, the investor will immediately receive 110% of their investment in Bitcoin.

The trove can also be used as collateral to borrow lokBTC with up to 91% LTV (Loan to Value) which can be redeemed back to lokBTC to BTC and sold to $.

• This mechanism provides super efficient capital usage.
• The interest (and the principal) can be paid automatically using mining rewards from the Trove itself as a self-repaying loan.

Although it’s not recommended, theoretically investors can repeat this process over and over, effectively doing leveraged financing.

3. Bitcoin Miners

Miners connect to the Loka Decentralized Mining Pool by sending hashrates from their ASIC machines and receive daily mining rewards without any minimum threshold. The mining pool fee is the lowest in the industry.

The fee can even be offset by the yield if miners also participate as Liquidity Providers by posting their mining rewards to LBLP in one click.

Miners can access permissionless financing through forward hashrate contracts (troves). These are created or accepted by investors and offer capital efficiency and a hedge against Bitcoin's price volatility:

• Miners can utilize their investment returns upfront to purchase additional machines.
• They can hedge against price volatility by securing the future price of Bitcoin in dollars and receiving the money immediately.
• The system is borderless and permissionless, eliminating the need for KYC, reflecting the spirit of the Bitcoin network. As long as Bitcoin miners can produce hashrates and provide collateral for the trove, they can participate.

<aside> 💡 The collateral provided by miners is released linearly every 24 hours, provided the miners produce sufficient hashrates according to the contract. For example, in a 12-month contract, 50% of the collateral would be released back to the collateral provider by the end of month 6.

Miners can also appoint third-party insurers (or their internal investors) to provide collateral for them.

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