Tropykus is the name of a bitcoin (BTC) -based decentralized finance (DeFi) protocol, built on top of the sidechain (RSK). It targets the Latin American market and is designed to apply for loans, lend funds and earn interest by interacting with smart contracts in a simplified way. In addition, it encourages bitcoiners to contribute to emerging economies to achieve social impact through financing.
Diego Mazo and Mauricio Tovar, Chief Technology Officer (CTO) and Chief Operating Officer (CCO) of Tropykus, told, exclusively for CriptoNoticias, the story behind their initiative and how they decided to come together to take advantage of the strengths of decentralized finance.
His idea is to help the inhabitants of Latin America have access to loans denominated in RBTC, DOC, RIF, USDT and DAI , so that they can carry out projects and save, taking into account that, with their national currencies, they are presented uphill. In addition, his proposal encourages bitcoiners from developed countries to donate profits to increase loan yields in favor of the inhabitants of Latin America.
Mazo and Tovar’s own experiences, with rejected loans or high interest rates from commercial banks, led them to understand that the time had come to offer new alternatives. So, since the beginning of 2021, their efforts are part of the emerging decentralized financial movement that reaches the Bitcoin network through the RSK sidechain, which allows the execution of smart contracts.
The initiative has been in the test network since April and, so far, more than 300 wallets have interacted with the protocol. The Colombian startup hopes that the companies it hired to audit the protocol, Coinspect and Quantstack, will complete their task to launch on RSK’s mainnet, as explained by Mazo.
The platform does not have centralized custody, which means that users keep their private keys to directly access their assets. In addition, their system is open source , a clear sign that everything can be questioned by anyone who takes a look and observes any irregularities.
Mazo and Tovar assure that the protocol is very easy to operate, since they were able to simplify the operation to improve the user experience. “We are concerned that the user, knowledgeable or not, can operate with ease. You only need a non-custodial cryptocurrency wallet, compatible with the Ethereum Virtual Machine to enter the protocol. From there you deposit, save and, as you have more funds saved, you have greater benefits from your loans, “said Tovar.
We share the challenges that the entire cryptocurrency industry has and that is that, in general, the use of crypto is still very restricted to people who have technical knowledge. So we are making a great effort to try to eliminate all these frictions.
Mauricio Tovar, CTO of Tropykus.
“In fact, we are aware that there is no perfect software, so we want to maintain continuous improvement, continuous development of processes, improvement of smart contracts, improvement of the user experience. For this reason, the contribution of the community is very valuable for us, to start from there and design, ”said Diego Mazo.
A decentralized protocol for the Tropics
The startup , as a reflection of the fact that it is a project on a global scale, is made up of a main team of 9 people who are located in different parts of the world. However, the nucleus of Tropykus began to take shape in Colombia , where Mazo, Tovar and Mesi Rendón are based, the latter, who is responsible for the security of the platform.
Soon, the project will join the populous establishment of initiatives born in a South American country. This is where its name comes from, from its proximity to the imaginary tracing of the terrestrial sphere, the tropics, from the Latin tropicus .
The platform does not discriminate against anyone because of their nationality or geographic location, although its proposal focuses on the 7 million cryptocurrency users that currently live in Latin America , who will be able to deposit to obtain a yield or request a loan of up to 60% of the value collateral or guaranteed.
The first step to interact with the protocol is to have bitcoin in a wallet that you connect to the Tropykus platform. Once you decide the amount that you are going to deposit to the protocol, you proceed to obtain an annual yield of 4% that few can offer in a decentralized way in the current market. This performance is not delivered at the end, but after each block of the protocol. With this, the user will have the possibility to withdraw their funds from the platform when they so decide.
Diego Mazo, CTO of Tropykus.
The manager adds what he considers to be another added value that the startup will deliver to users. In that sense, he points out that, unlike traditional banking, where there is a deadline to pay a loan, in Tropykus the procedure for loans will be different.
It details that the user must first deposit a guarantee, and in doing so, an interest rate will be set in RBTC, DOC, RIF, USDT and DAI as established by the market at that time. Then, with each block, the protocol charges the portion of the set percentage corresponding to the annual interest.
The loan protocol follows the dynamics of many others already in DeFi based on other blockchains. In this regard, Mazo explained that in Tropykus the credit can be paid as the user decides, it can be after two days, after two months, after two years, no problem. What you should bear in mind is that you will have to pay the interest associated with that credit, for as long as the loan is open.
In its first stage, the protocol will offer its financial services based on bitcoin (RBTC) and stablecoins, but the team plans to add a fiat bridge in different countries. In such a way that, with fintech allies in each country, users will have the possibility of withdrawing their funds in bolivars, Colombian pesos, Argentine pesos or other local currencies, depending on the country in which they are located.
With the fiat bridge we will respond to the approach that many people make to us, such as: ‘Why am I going to borrow in bitcoin or stablecoin if I am not going to be able to use it in my box?’ In that case, you can request a loan in digital assets, having a mentality that you are going to obtain a return, you are going to pay the credit that has been requested and make a profit from that operation.
Diego Mazo, CTO of Tropykus.
The chief technology officer provided an example in which a loan is requested in Dollar On Chain (DOC), the stablecoin of the Argentine startup Money on Chain, equivalent to one dollar. “Suppose we order 200 DOCs and exchange it for any other token such as ether, which in advance we have the expectation that it will go up in price.
Then, after an acceptable return has been obtained for 3 or 4 days, due to the rise in the value of the cryptocurrency, we change these funds back to DOC, we pay the loan and we keep the profit that this operation has yielded », Mazo added.
It is also necessary for the user to take into account that he runs the risk of the guarantee being liquidated if the price falls while it is deposited on the platform. Faced with this latent danger, you must decide if you want to risk losing your money, as cases have been presented in the DeFi ecosystem, as well as in centralized cryptocurrency lending platforms.
DeFi on Bitcoin with a social focus
Lower interest rates than those required by traditional banking and better profit margins, without giving up ownership of the funds, is something difficult to find in Latin America and that already gives the platform a social focus, according to what indicated by Mauricio Tovar.
Since we offer a solution to all these inconveniences, and we also help users to save everything they cannot with their local currencies in Latin American countries, then we are giving our platform a social approach. We are working to become a real alternative to the traditional financial system and promote change in Latin America, then we will go further, to Africa, so that this change occurs throughout the world.
However, in Tropykus there is also the possibility that bitcoiners from developed countries will stamp a footprint in regions that are developing. It is because, those who make deposits on the platform to obtain a 4% return, can opt for the social return, with which they can assign a part of their profits. Your contribution will be combined with a percentage that the protocol will assign so that together they can grant loans with a higher yield for citizens living in Latin America.
Tropykus was born as a platform for Bitcoiners to become agents of change, since they will facilitate access to more fair and open financial products for ordinary people with their returns. We want to unleash the potential of Bitcoin to benefit everyone in emerging economies.