Hi Guys,
I’ve been away from the space for a while and checked on Sovryn today, and after seeing the news about “0% fees borrowing”, I have a mathematical dilemma, which I hope someone more expert than me can answer.
I’ll be using simple numbers to illustrate the concept.
What happens if.
I use 1 bitcoin as collateral to borrow 16k USD (as I assume the USD I receive will be below market value)
I then use those 16k to buy more bitcoin, let’s say 0.9BTC
I then use those 0.9BTC to borrow 14k USD
Which I then use to buy 0.8 BTC
And I use them as collatoral, to borrow 12k
Which I then use to buy 0.7 BTC
(I will stop here for simplicity)
Now, let’s assume bitcoin doubles in value (from 20k to 40k)
My 0.7 BTC is worth 28k USD, I sell all of it and get 28k USD
I use 12k to repay the third loan, and 14k to repay the second loan.
I’m left with 2k USD and 1.7btc