How it Works
Learn how Encrypted Energy helps you lend your Bitcoin collateral to earn incremental income.
The Encrypted Energy Method
Exchange
We exchange your Note's collateral for Bitcoin custodied by one of the 7+ Bitcoin ETFs.→
Monitor
Every hour during active trading sessions we track the supply-demand ratios for each Bitcoin ETF.→
Rebalance
When a supply-demand imbalance occurs, we rebalance your collateral into a new Bitcoin ETF.→
Profit
Your Note's income likely exceeds fees charged by Bitcoin custodial services.A clear path to dynamically optimized lending.
Introducing a simple, proven workflow that scales, so you can take advantage of sensible risk-reward market dynamics to earn incremental Bitcoin.
| On your own... | ||
|---|---|---|
| 1 | Research available Bitcoin ETFs. | |
| 2 | Instrument tracking for each ETF's borrowing supply-demand. | |
| 3 | Research stock brokerage partners with lending programs. | |
| 4 | Filter stock borkerages without programmatic trading. | |
| 5 | Exchange spot Bitcoin for shares in one or more ETFs. | |
| 6 | Identify an opportunity to rebalance your Bitcoin assets. | |
| 7 | Rebalance with as low bid-ask spread and trading fees as possible. | |
| 8 | Track your borkerage account NAV balances. | |
| 9 | Receive interest pay out from stock brokerage. | |
| 10 | Exchange interest payment for spot Bitcoin or derivatives. | |
| 11 | Ensure tax compliance on trades and income payments. | |
| With Encrypted Energy... | |
|---|---|
| 1 | Create new Flexible-Rate Note. |
| 2 | Fund your Note. |
| 3 | Receive interest payment in spot Bitcoin. |
Only 3 easy steps—the fast-track to incremental Bitcoin income.
Achieve your income goals quicker with a clear, battle-tested lending strategy, reliable trade operations to carry it out, and an incredibly helpful, trusted partner along the way.
The results speak for themselves:
| On your own... | With Encrypted Energy... | |
|---|---|---|
| Time Required | Months | Days |
| Risk Level | High | Low |
| Yield Lift | Unknown | 1-5%* average |
*Past performance does not guarantee future results.
How does the Encrypted Energy rebalance algorithm work?
Borrowing demand is the single factor that most affects an ETF's lending yield. Our automatic scoring system consumes data from each Bitcoin ETF and monitors for high demand-low supply imbalances, among other factors — updated hourly throughout the trading session.
Examples of data that are considered before determining to rebalance:
Rebalance Considerations
Borrowing demand
The aggregate number of shares traders want to obtain for purposes such as short sales.
Average supply
The aggregate number of shares available to be borrowed over various timespans.
Expense ratio
A percentage fee that the ETF sponsors charge in exchange for providing their services.
Trading volume
The number of shares of each ETF that are traded during a given time period.
Bid-Ask spread
The difference between the lowest ask price and the highest bid price.
Time-based trends
Futures expiration dates, time of the week, time of day, one-time events, holidays, etc.
Where does the yield come from?
Authorized Participants, such as Jane Street, Macquarie, Virtu, and Marex, as well as numerous hedge funds and other institutional investors and individual investors, borrow shares to sell short all the time for a variety of reasons. Whether to 'hedge' directional risk, make a directional bet, or trade Bitcoin's volatility, there's always participants in the market aiming to get short exposure.
Why are we confident the demand for shorts will persist? Bitcoin's predecessor, Gold, has been around for thousands of years, and there's still demand to short Gold every day. That's not to mention that Bitcoin is a structurally declining-in-price commodity (after the occasional price spike, of course!). Despite Bitcoin outperforming nearly every asset in the last 10 years, most days in Bitcoin's history are down.
But wait, there's more...
In-kind interest payments and bi-directional market exposure..
Interest accrued from your Note is paid out using Bitcoin-native Lightning payments.
Prepare for any market outcome and hedge your Bitcoin exposure by loaning collateral to borrowers of inverse-Bitcoin ETFs.
Don't take our word for it.
Our customers range from institutional investors to wealthy individuals. In every case, we've helped them to increase their yield with just a few clicks.
"Encrypted Energy helped us realize that the Bitcoin ETFs individually are never one-size-fits-all; borrowing demand for each ETF is different. With their help, our lending yield increased 30% virtually overnight."
Herwig K. — InvestReady, Founder & CEO
What's next?
Start your Encrypted Energy journey now by creating a free account to get started.
Get access to our UI for creating a new Note, detailed tracking of your Note's performance, and an API to automate the Note creation process or extract reporting data.
View a complete reference of the most significant risk factors associated with investing in one of our speculative Floating-Rate Notes.
Quickly create a new Note and fund it with spot Bitcoin once it is approved, then sit back and watch the results.
Or continue exploring.
View Historical Borrowing Demand, view our Frequently Asked Questions, or read the latest news on our Blog.