Is it Safe to Earn Interest on Your Bitcoin SV with the BSaV.io Platform?
At the recent Coingeek Conference, a company called BSaV.io sponsored a booth and offered 5.15% APY on your idle BSV. They also offered 0% APR loans using BSV as collateral.
But when you visit the BSaV website - there's hardly any information. They don't say how they are able to pay interest on your money. There is no about page to say who the founders are, what their background is and why anyone should trust them with our BSV.
Even when you sign up for an account, their FAQ page leads to 'Not Found'.
Not a good look.
Still, I was curious. Surely Coingeek doesn't just let anyone sponsor a booth or continue running adverts on their site. I found a contact email (firstname.lastname@example.org) and sent some questions.
This post aims to share some of the answers I received. I've trialled earning interest on some of my BSV for two weeks now and have been happy with the service so far.
*** DISCLAIMER: I am not BSaV. I do not represent them! Just sharing what I have researched in case it is useful to anyone here. Any errors are mine and not BSaV's.
Who are BSaV?
The founders of BSaV are Dr Edgar White and Elizabeth White. It was incorporated in the UK as BSAV Holdings Ltd, company number 12912849.
They presented as The White Company at the 2018 Coingeek conference, where they introduced a stablecoin, a debit card and their White Wallet.
Since then however The White Company has shifted to being a private institutional exchange. They’ve taken down their public facing websites and I believe are rebranding their public facing services as BSaV.
The other key people behind BSaV are Slavko Krstic, Stephane Kouakou and Mariusz Antonik. All of whom work at APIS Capital Management.
How do they pay me interest on my BSV?
Their service is very similar to the popular Celsius app. They work with some of the same institutional counterparties and custodians.https://medium.com/@aminerahal613/lessons-from-the-immigrant-hustle-dr-edgar-radjabli-4a46aabb3c02
BSaV have institutional clients who want to borrow BSV for varying reasons. It could be arbitrage, market making or shorting. My assumption is they charge institutions interest to borrow funds, then pay clients who deposit BSV a lower interest rate. The difference being their profit.
What makes BSaV different from Celsius is that they plan to make BSV the central currency of the platform. They also pay a slightly higher interest of 5.15% instead of 4.51% as of 28/10/2020.
Are they trustworthy?
Dr. Edgar White, who used to use the last name Radjabli, worked as a dentist until he was in a car accident that meant he could not practice clinically anymore. He switched careers to investment management and founded APIS Capital Management in 2016. There is an article where he shares more of his personal story.
I noticed the Loan Doctor interface was very similar to the BSaV interface. One of their services on Loan Doctor was offering clients 6% APY on their money. At APIS Capital Management they had a similar financial product. BSaV was simply another version of that same financial product they've been in the business of offering for a few years now. This looked like a good sign to me.
Is my money safe on BSaV?
BSaV haven’t integrated features like 2FA yet, but this is planned. They use custodians like Prime Trust and Kingdom Trust. I understand that these two custodians have insurance which covers them in case they get hacked. BSaV are working with the custodians so that those policies also apply to them incase BSaV gets hacked. So it's my understanding that there is no current insurance in place if BSaV gets hacked. There's also no cover for things like your own BSaV account getting hacked or the price of BSV going to zero.
They do have automatic liquidation events to protect loaned out funds. They have a standard 50% LTV (Loan to Value) for collateral. Although they won't do this if they are lending to a fully creditworthy counterparty, like a US regulated Broker Dealer. As I understand all of their clients they lend to are institutions right now, with no retail traders that they lend to.
Are there any issues with withdrawing my money?
Withdrawals are said to take one month. Although in practice this is only for large BSV holdings because the BSV may still be lent out and will need to be called back. I tested a small withdrawal early on and it was processed within a day.
They did say that the more they grow as a company, the shorter withdrawals will end up taking as they'll have more liquidity.
Does the interest earned compound daily?
The interest is paid out daily, however it only compounds monthly. In practice, it's not a huge difference. Daily compounding gives an extra 0.01 BSV per year on 100 BSV deposit compared to monthly compounding.
Do they ask for KYC?
As of right now, not for signing up and depositing small amounts. Although I believe they will ask for KYC if you deposit a large amount and then try to withdraw it later.
I'm excited to see a company build what would probably be called a DeFi-esque product on BSV. They said they plan to over time have everything onchain and tokenised. So every time your funds get loaned out, a transaction is made onchain that you can verify. They're working with the Bayesian Group on this, although this will probably take some time to build out.
Overall I'm not sure given the counterparty risk of BSaV being hacked whether it is wise to have large sums deposited there in return for 5.15%. With time as I see continued updates and greater security measures I'll continue to reassess.
But for now I'm happy to support a company building on BSV with small amounts earning interest.