Grant Proposal - Launch of Yield-Bearing Bitcoin on Rootstock

Grants & Incentives
1

1. Project Name & Description

Project Name: Excellar

Description: Bringing the first Bermuda-licensed, compliant Bitcoin yield product to Rootstock. xlBTC is a yield-bearing Bitcoin token (~5% APY) that gives RSK its first institutional-grade DeFi primitive.

The Problem: There’s $245B in institutional Bitcoin sitting around doing nothing. MicroStrategy has $40B. Corporate treasuries another $110B. Family offices, crypto funds, IRAs - all dead capital. Meanwhile, $20B+ has flooded into yield protocols like Ethena ($12B TVL), but institutions can’t touch them. No compliance, no proper custody, no regulatory clarity.

Our Solution: Excellar is the first Bermuda DABA-licensed platform (Class T #202403601) offering compliant Bitcoin yield through tokenized products. We launched USDXLR in August - treasury-backed stablecoin earning ~4% APY. Already processed $3M+, onboarding two payment service providers with 15,000 clients and $50M+ monthly volume.

Now we’re launching xlBTC - Bitcoin that earns ~5% APY while staying Bitcoin. Just sustainable yield from delta-neutral strategies (funding rates, basis trading, term structure arbitrage). It’s fully ERC-20 compatible, so DeFi protocols can build on top of it.

Why Rootstock: It’s the only Bitcoin-native EVM chain institutions will actually trust. Rootstock has great tech and solid protocols, but needs a compliant on-ramp for the $245B in institutional Bitcoin.

Mission: Bridge institutional capital to Bitcoin DeFi through compliant, sustainable yield infrastructure.

Website: https://excellar.finance
X: @excellarfinance
Contact: amit@excellar.finance | Telegram: @amitkaush

2. Team Background

Amit Kaushik - CEO & Co-Founder

  • Wall Street quant turned crypto infrastructure builder

  • Ex-Millennium derivatives trader, then MD at major crypto platform managing $1.5B across Bitcoin, Ethereum, and yield strategies

  • Built derivatives infrastructure at Barclays

  • IIT Bombay + CFA

  • LinkedIn: https://www.linkedin.com/in/amit-kaushik-excellar/

Lisa Li - COO & Co-Founder

  • Chief Risk Officer at the same $1.5B platform, managing all portfolio risk

  • Previously Chief Risk Officer at ED&F Man (major commodities trading firm)

  • Deep DeFi background and institutional risk management expertise

  • LinkedIn: Lisa Li - Excellar | LinkedIn

Core Team:

  • 5 people total: engineers from top firms, quant specialists, risk professionals

  • Small team, high execution speed

  • Track record: Launched USDXLR in 6 weeks, processed $3M+ in first month

3. Total Grant Amount

Total Grant Amount: $100,000 in USDRIF tokens

Requesting for Milestone 1: $30,000

Fund Allocation:

  • Engineering & Development (45% - $45k): Smart contract development, security audits, backend infrastructure for Rootstock

  • Legal, Operations & Compliance (25% - $25k): Legal review, custody setup, risk management, regulatory reporting

  • Business Development (20% - $20k): Partnership development, integration support, liquidity provisioning, ecosystem events

  • Marketing & Community (10% - $10k): Co-marketing campaigns, integration guides, AMAs, institutional outreach

Additional Commitment: 2 full-time engineers + BD lead dedicated to Rootstock integration for 6 months

4. Milestone 1 Deliverables (Months 1-2) - $30,000

KPIs:

  • :white_check_mark: xlBTC smart contracts deployed on Rootstock testnet

  • :white_check_mark: Legal review complete (Rootstock-specific regulatory analysis)

  • :white_check_mark: Compliance infrastructure created (custody workflows, operational procedures)

  • :white_check_mark: Mainnet deployment ready (contracts audited and approved for mainnet launch)

Verification:

  • Testnet contract addresses published

  • Legal opinion document shared with Rootstock Collective

  • Compliance documentation available for review

5. Milestone 2 & 3

Milestone 2 (Month 3) - $40,000

KPIs:

  • :white_check_mark: Security audit passed (RSK-specific audit complete)

  • :white_check_mark: Live xlBTC on Rootstock mainnet (fully operational token)

  • :white_check_mark: API development complete (mint/burn/transfer functionalities operational)

  • :white_check_mark: Marketing campaign live (joint campaign with Rootstock Collective)

Verification:

  • Mainnet contract addresses and audit report

  • API documentation published

  • Marketing materials and campaign metrics

  • Audit report from security firm

Milestone 3 (Months 4-6) - $30,000

KPIs:

  • :white_check_mark: Client dashboard operational (institutional-grade interface for xlBTC management)

  • :white_check_mark: One DeFi protocol integration complete (xlBTC accepted as collateral or in liquidity pool)

  • :white_check_mark: Regulatory reporting dashboards operational (real-time compliance monitoring)

  • :white_check_mark: Case studies and integration guides published (documentation for other Rootstock builders)

Verification:

  • Dashboard link and user documentation

  • Protocol integration announcement and contract addresses

  • Regulatory dashboard demo

  • Published case studies and integration guides

  • On-chain AUM metrics

6. Timeline

Month 1-2 (Milestone 1):

  • Week 1-2: Rootstock testnet deployment, initial smart contract development

  • Week 3-4: Legal review, compliance infrastructure setup

  • Week 5-6: Security preparations, testnet testing

  • Week 7-8: Finalize mainnet deployment preparation

Month 3 (Milestone 2):

  • Week 1-2: Security audit, mainnet deployment

  • Week 3: API development and testing

  • Week 4: Liquidity provisioning and marketing launch

Month 4-6 (Milestone 3):

  • Month 4: Client dashboard development, first protocol integration discussions

  • Month 5: Protocol integration completion, regulatory dashboards

  • Month 6: Marketing scale-up, case studies, integration guides

Total Duration: 6 months from grant approval

7. Technical Specs

Smart Contract Architecture:

  • ERC-20 compliant xlBTC token on Rootstock

  • Mint/burn functionality controlled by Excellar’s licensed custody infrastructure

  • Integration with Rootstock’s rBTC bridge for seamless BTC <> xlBTC conversion

  • Built on Solidity, fully compatible with Rootstock Virtual Machine (RVM)

Yield Generation Strategy:

  • Delta-neutral strategies: funding rate arbitrage, basis trading, term structure trades

  • No directional Bitcoin exposure

  • Target APY: ~5% (varies with market conditions)

  • Institutional-grade risk management and reporting

Custody & Operations:

  • Bermuda-licensed custody infrastructure (DABA #202403601)

  • Integration with Fireblocks or similar institutional custody solution

  • Multi-sig controls and hardware security modules (HSMs)

  • Real-time attestation and proof-of-reserves

DeFi Integration:

  • xlBTC can be used as collateral in lending protocols (Sovryn, Tropykus)

  • Liquidity pairs on RSK DEXs (SushiSwap, Uniswap on Rootstock)

  • Composable with other Rootstock DeFi primitives (DOC stablecoin, etc.)

Security:

  • Third-party security audit specific to Rootstock deployment

  • Formal verification of critical contract functions

  • Bug bounty program post-launch

Interoperability:

  • We’ll use Rootstock DeFi protocols for our own yield generation

  • Hold rBTC as operational collateral

  • Two-way value flow: bring capital in, put it to work in Rootstock ecosystem

8. Value Prop for Rootstock

Institutional Capital Flow:

  • Our Bermuda license enables TradFi capital to flow into Rootstock

  • Corporate treasuries, insurance companies, wealth platforms need compliance - we have it

  • Current pipeline: $20M reinsurance captive, $10M family office, $20M wealth platform

  • Two payment service providers with 15,000 clients onboarding ($50M+ monthly volume)

New DeFi Primitive:

  • xlBTC becomes the first institutional-grade, yield-bearing Bitcoin primitive on Rootstock

  • Lending protocols can use it as collateral

  • DEXs can create liquidity pairs

  • Yield aggregators can build strategies on top

  • It’s Bitcoin that works in DeFi while earning yield

Deep Ecosystem Integration:

  • We’re not just deploying tokens - we’re active participants in Rootstock DeFi

  • We’ll use Rootstock protocols (Sovryn, Money on Chain, Tropykus) for our own yield strategies

  • We’ll hold rBTC as operational collateral

  • Two-way value flow: we bring capital in AND put it to work within Rootstock, generating fees and liquidity

Ecosystem Credibility:

  • When a Bermuda-licensed, institutional-grade platform picks RSK over other chains, that’s a signal

  • Proves that serious, regulated players trust Rootstock’s Bitcoin security and EVM compatibility

  • Opens doors for other institutional projects to build on Rootstock

Synergies:

  • Potential integrations: Sovryn (lending/borrowing), Money on Chain (DOC pairing), Tropykus (collateral)

  • DOC + xlBTC combo gives institutions both stablecoin and Bitcoin yield exposure

  • Our custody workflows can benefit other institutional Rootstock projects

Track Record:

  • Already live: USDXLR processed $3M+ in first month

  • Bermuda Monetary Authority approved xlBTC token design

  • $50M committed institutional pipeline ready to deploy

9. Demo and GitHub Repo

Rootstock Testnet Demo:

  • Will be available after Milestone 1 completion

  • Testnet contract addresses will be published

  • Demo dashboard for xlBTC mint/burn/transfer operations

GitHub Repository:

  • Smart contracts will be open-sourced after security audit

  • Integration documentation and SDKs for Rootstock developers

  • Code repository: [To be published post-audit]

Documentation:

  • Integration guides: Will be published as part of Milestone 3

  • API documentation: Available post-Milestone 2

10. Socials

Conclusion

Excellar is already live with real products ($3M+ processed), real institutional pipeline ($50M committed), and real regulatory approval (Bermuda DABA license). We’re not pitching a concept - we’re bringing working infrastructure to Rootstock.

What Rootstock Gets:

  • First institutional-grade, compliant Bitcoin yield product

  • Real TradFi capital flowing into the ecosystem

  • New DeFi primitive that other protocols can build on

  • Proof that serious, regulated players choose RSK

In 6 months, Rootstock will have:

  • Live xlBTC with institutional backing

  • DeFi protocol integrations using xlBTC

  • The first compliant, yield-bearing Bitcoin token on Bitcoin’s most secure EVM chain

We’re betting on Rootstock long-term. This grant helps us prioritize RSK in our multi-chain strategy and gets us there faster.

Let’s bring institutional Bitcoin to where it belongs - on Bitcoin.

1 Like
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Very interesting, hopefully we’ll soon see institutional investors doing BTCFI!!!

1 Like
3

I think this product, if well succeeded, running for a few years without hiccups that may affect its credibility, and especially showing stability during market stresses such as this October 10th crash, would become huge and draw major interest.

Feels like these modern stablecoins which pass through their US treasury yields. And people go crazy looping it for leveraging yields.
People would go crazy looping a 5%+ yield-bearing Bitcoin if they can borrow BTC at ~2%. All goes according to plan, this could drive TVL into Rootstock and dApps such as lending/borrowing.

That said, All these mechanisms you mentioned:

delta-neutral strategies (funding rates, basis trading, term structure arbitrage)
are not available within Rootstock. They usually require very liquid derivatives veues, so not to loose to ineficiencies, low liquidity, spot/future prices not converging on expiry, etc.

  1. How would you properly handle and secure the funds back and forth in and out of Rootstock into a main derivatives venue?

  2. How would you handle BTC <> XLBTC conversibility and XLBTC 1:1 price peg with BTC? Would they be convertible? time locked, with a free floating BTC/XLBTC liquidity pool? How would you handle “withdraw” or “unmint” requests and liquidity?

  3. What derivatives venue are you thinking on using? Centralized or decentralized?

  4. What previous experience and results do you have with these kind of yield strategies on BTC?

  5. You surely didn’t come up with this strategy after Oct 11th. How did your setups perform in the Oct 10th crash?

1 Like
4

Thanks for taking the time to review our proposal and for these thoughtful questions. Let me address each one:

1. How we handle funds and secure operations with Rootstock:

We operate in a TradFi mode with institutional-grade risk management. Here’s our setup:

Users supply rBTC to mint xlBTC and burn xlBTC to receive rBTC. Critically, rBTC never goes directly onto derivatives venues. Instead, we work with a TradFi Prime Broker under a tri-party custody arrangement. The rBTC stays in segregated custody (e.g., with BitGo), while the Prime Broker provides the collateral needed to maintain and settle positions on exchanges.

This approach gives us two major advantages: First, we can use rBTC in derivatives strategies even though exchanges don’t accept it as direct collateral. Second, client assets stay off-exchange, which significantly reduces counterparty risk.

We also purchase insurance through the Prime Broker during periods of elevated volatility. For example, during events like October 10th, we use APIs to buy short-duration insurance covering our margin and PnL on exchanges.

Bottom line: Yes, Rootstock currently lacks native delta-neutral strategies like basis trading, but we can still deploy rBTC as collateral for these positions across both CeFi and DeFi venues.

We’ll also support the RSK ecosystem directly as it matures. When compelling BTCFi yield opportunities emerge on Rootstock protocols, we’ll allocate capital there as well.

2. xlBTC convertibility, peg maintenance, and liquidity:

Our primary users can mint and burn xlBTC directly with us at current NAV. xlBTC is a NAV-tracking token, not a stablecoin, so it reflects the underlying portfolio value.

For withdrawals, primary users submit requests via Slack or API. We maintain a portion of the portfolio in highly liquid positions to handle daily redemptions. Additionally, we have credit lines with our Prime Broker who can provide bridge liquidity while we unwind positions in an orderly fashion.

We plan to establish a BTC/xlBTC liquidity pool in the future, giving both primary and secondary users another access point for liquidity.

3. Venue selection and risk management:

We have a regulator-approved risk framework requiring thorough due diligence on every venue we use. Each venue receives a risk rating that determines capital allocation limits. For example, even on a blue-chip protocol like Aave, we cap exposure at 40% of capital.

We focus on the top 2-3 crypto exchanges by open interest and volume, plus proven DeFi protocols like Aave, Pendle, and Hyperliquid. Our risk team monitors roughly 80 Key Risk Indicators that get submitted to our regulator monthly.

4. Team experience with BTC yield strategies:

Our team managed approximately $1.5B in BTC, ETH, and stablecoin capital for several years before founding Excellar. We bring decades of Wall Street derivatives experience from firms like Millennium Management and Barclays.

5. Performance during the October 10th crash:

On a net basis, our portfolio was profitable through that event. We ran market-neutral positions with highly liquid legs, which allowed us to navigate the volatility effectively. Once launched, we’ll provide monthly attestations including a fully audited track record starting April 2025 that will cover the October 10th period.

5

Hi Excellar team - thank you for your proposal! I have a few questions on my side:

  1. When you mention “rBTC as operational collateral,” what specifically does this entail? Are you planning to maintain a significant amount bridged to Rootstock, or is this primarily for transaction fees?

  2. How will your xlBTC product complement rather than compete with existing Rootstock DeFi solutions? What unique value does it bring that doesn’t directly overlap with current or planned ecosystem products?

  3. Could you provide more detail on which specific Rootstock protocols (Sovryn, Money on Chain, Tropykus) you plan to integrate with first, and how these integrations would generate fee revenue for those protocols?

  4. Beyond bringing institutional Bitcoin to Rootstock, what direct benefits would existing Rootstock stakeholders receive from xlBTC’s implementation?

  5. What percentage of your yield generation will occur on Rootstock versus off-chain? How much of the capital flow remains within the Rootstock ecosystem?

Best

6

Thank you for the thoughtful answers.

Some additional questions, if I may:

  1. What will be your revenue/fee/monetization model?

You mentioned:

We launched USDXLR in August - treasury-backed stablecoin earning ~4% APY.

Already live: USDXLR processed $3M+ in first month

  1. I looked for USDXLR but didn’t find it. In which blockchain is it on? What’s its marketcap? Where can users mint or redeem it? I didn’t find an Excellar dApp.
    The only reference of a DeFi Excellar product is in DappRadar, with a $25k TVL. Also found some references to XUSD. Couldn’t find proper references on DeFiLlama, Coingecko, CoinMarketCap.
    Can you clarify?

  2. You mentioned a multi-chain strategy.
    What’s Excellar’s first chain? Which will be the next ones?
    Do you have any strategy for integrating chains, managing liquidity and bridging? Such as Layer Zero, Wormhole, Chainlino CCIP, etc?

7

Hi @tamlerner , thanks for your questions. Here is our response.

Question 1: rBTC as Operational Collateral

Yes, we’re maintaining a significant amount of rBTC bridged to Rootstock—this isn’t just for transaction fees.

The rBTC serves as collateral with our Prime Broker for our yield strategies. Since we can use rBTC as collateral, it stays locked in the Rootstock ecosystem even when we’re generating yields elsewhere. As our xlBTC TVL grows, our rBTC collateral on Rootstock grows with it.

Question 2: How xlBTC Complements Existing Solutions

xlBTC is different from current Rootstock products in one key way: we can generate yield from both on-chain and off-chain sources. No other product on Rootstock combines CeFi and DeFi strategies like we do.

We’re not competing with existing protocols—we’re giving them a new high-yield asset to work with. For example, users can supply xlBTC to Sovryn or Tropykus and borrow rBTC against it. Because xlBTC already earns yield, this creates profitable loop trading strategies that weren’t possible before on Rootstock.

If you loop 5x, you multiply that yield differential. That means more borrowing demand, more trading volume, and more fees for Rootstock protocols. We’re adding a new tool to the ecosystem that makes existing protocols more useful.

Question 3: Protocol Integration Plans

We’re starting with Tropykus and Sovryn in the first few months. The integration is straightforward—we list xlBTC as collateral on their lending platforms and create liquidity pools for xlBTC/rBTC pairs.

How they generate fees:

  • Users supply xlBTC and borrow rBTC, paying interest to the protocols

  • Higher protocol utilization means more revenue

Once we launch our USDXLR stablecoin, we’ll work with Money on Chain on similar strategies with dollar-denominated assets.

The exact timing depends on technical integration work with each protocol, but Tropykus and Sovryn are our priority for the first phase.

Question 4: Benefits to Rootstock Stakeholders

For existing DeFi users:

  • Access to a yield-bearing BTC asset (4-6% APY currently)

  • New loop trading strategies that can multiply yields 3-5x through leverage

  • Another option for BTC holders who want yield without leaving the Bitcoin ecosystem

For protocols:

  • More borrowing demand and higher utilization rates

  • Increased trading volume from loop strategies

  • A new collateral asset that attracts different users

For the Rootstock network:

  • More TVL locked in the ecosystem

  • Higher transaction volume from xlBTC trading and rebalancing

  • Validation from regulated institutional capital

We’re also bringing our institutional user base—these are Bitcoin holders who wouldn’t typically use Rootstock protocols directly, but xlBTC gives them a reason to bridge over.

Question 5: Yield Sources and Capital Flow

Initially, about 20% of xlBTC yield comes from Rootstock DeFi and 80% from off-chain strategies (CeFi basis trading, derivatives, other chains).

The rBTC backing xlBTC stays on Rootstock. It’s locked as collateral with our Prime Broker, so even when we’re generating yields elsewhere, the underlying capital doesn’t leave the ecosystem.

As Rootstock’s DeFi matures and yields become more competitive, we’ll naturally shift more strategies on-chain. But we can’t promise specific percentages or timelines—it depends on actual market conditions and protocol development.

Why off-chain yields help Rootstock:

  • They attract institutional capital that wouldn’t come otherwise

  • The higher base yield makes loop trading on Rootstock protocols profitable

  • It’s genuinely additive—we’re not competing for the same yield sources as existing Rootstock products

The key point: we’re bringing external yields into the ecosystem while keeping the capital on Rootstock, not the other way around.

2 Likes
8

Hi @ChronoTrigger, please see my response below.

  1. We take a portion of the yield (~10%) before passing the rest to the token holders.

  2. USDXLR was launched on the Stellar network. You can view the details here:
    https://stellar.expert/explorer/public/asset/USDXLR-GBMAAGRUMXBRG3IG6BPG5LCO7FTE5VIRA3VF64BFII3LXC27GSEYLHKU-2

    The token was originally launched under the ticker XUSD, which was later changed to USDXLR to avoid confusion with several other tokens in the market using the same ticker.

  3. We first launched USDXLR on the Stellar network. xlBTC will be natively launched on Rootstock, and Ethereum. We are looking at LayerZero as a solution for our bridging strategy.

1 Like
9

Hello @kamik thank you for this proposal and for answering questions. xlBTC seems like an exciting opportunity to increase institutional adoption and engagement on Rootstock. We have a few additional questions:

  1. What types of security audit(s) do you plan to have done and with which audit firm(s)?
  2. When you write that USDXLR processes $3M+ in the first month, is that TVL? What was the monthly volume?
  3. What markets is USDXLR available for trading?
  4. What is Excellar’s AUM?
  5. What fees will Excellar charge for xlBTC?

Thank you!

10

Hi @404Gov,

Please find my answers below.

What types of security audit(s) do you plan to have done and with which audit firm(s)?

We’re planning smart contract audits for xlBTC token and integration contracts. Looking at OpenZeppelin and Quantstamp—specifically firms that have worked with other Rootstock projects like Sovryn or Tropykus. We’ll share audit reports publicly once complete.

When you write that USDXLR processes $3M+ in the first month, is that TVL? What was the monthly volume?

Monthly volume is around $500K. We launched the stablecoin in test phase with full launch coming in December.

What markets is USDXLR available for trading?

USDXLR operates on Stellar through our institutional channels. Our clients can directly mint and burn with us. Due to regulatory constraints, we evaluate every DEX before listing.

What is Excellar’s AUM?

Currently fluctuates between $20K-$100K across all our products.

What fees will Excellar charge for xlBTC?

0% management fee. We take a performance share of the yield—users typically receive 70-80% of the gross yield we generate.

11

Thank you @kamik and Excellar for bringing this timely proposal. Appreciate all the thoughtful questions asked by delegates and the answers so far.

We do have quite a few questions ourselves, apologies if we missed answers to any of these above:

  1. Is the ~5% APY a target or a historical average based on backtests?

  2. You’ve confirmed ~80% of the yield is from off-chain sources. How do you manage the counterparty risk of these, and what is your due diligence process?

  3. Perhaps easier, do you have a fact sheet or more specific details on the strategy that you can share?

  4. On collateral and principal:

    1. Is the underlying BTC held 1:1 in segregated cold custody, with only the yield-generating portion of capital deployed? Or is the principal BTC itself used as margin/collateral for these trades?

    2. In the case of a “black swan” event, would the depositor’s principal BTC be at risk?

    3. Is xlBTC redeemable 1:1 for BTC at all times?

  5. Funding rates and basis can turn negative for extended periods. How would you manage this? Will the APY go to 0% or negative, or do you have strategies to mitigate this?

  6. What are the backtested (or live) volatility and maximum drawdown of this yield strategy?

  7. On liquidity and redemptions:

    1. What are the redemption terms for xlBTC holders? Is there a lock-up period, a notice period, or potential withdrawal gates during high market stress?

    2. How would you manage a scenario if multiple large holders wish to redeem simultaneously while capital is deployed in term-structure or basis trades that are not instantly liquid?

  8. On proof of reserves: you mention real-time attestation, will these be an on-chain oracle or an off-chain dashboard provided by a third-party auditor?

  9. On Rootstock eco, adoption etc:

    1. When it comes to institutional on-ramping, could you walk us through the user journey for, say, a new family office?

    2. How do you plan to bootstrap liquidity? Are you planning any incentive programs (beyond this grant) to encourage adoption for xlBTC as collateral or liquidity provision?

  10. Thank you for clarifying that USDXLR is in testing until December. To help us understand the traction, could you elaborate on the relationship between the $3M+ processed volume and the current $20k-$100k AUM? Also, do you have LP commitments for the $50M pipeline post-full launch or where does that come from?

Thanks a lot!

1 Like
12

Hi @Avantgarde,

Thanks for asking these insightful questions. Please see my answers below.

Is the ~5% APY a target or a historical average based on backtests?

This is the projected yield on our portfolio for the month of October. Our target is 4-6%. We have been running the portfolio in tests since July.

Please see the tearsheet: https://docsend.com/view/d2yhcwqiaifj8z6j

How do you manage counterparty risk with ~80% yield from off-chain sources? What is your due diligence process?

We use an off-exchange custody solution and a prime broker who, under a tri-party agreement with the custodian, offers financing to open positions on exchanges.

We have a thorough due-diligence process for counterparties that was approved by our regulator. We use this framework to provide a risk rating for each venue, which then caps the collateral that can be used on that venue.

Is the underlying BTC held 1:1 in segregated cold custody, with only the yield-generating portion of capital deployed? Or is the principal BTC itself used as margin/collateral for these trades?

Under tri-party agreement, only a small portion of the yield-generating capital is held with the custodian in a tri-party agreement.

In the case of a “black swan” event, would the depositor’s principal BTC be at risk?

The positions are delta-neutral, so chances of this happening are low. However, if an exchange goes down, then any unsettled profit on that exchange would be at risk. We buy insurance from our prime broker from time to time to mitigate such risks.

Is xlBTC redeemable 1:1 for BTC at all times?

xlBTC is a NAV tracking token. It can be redeemed at NAV from Excellar less any redemption fees. We will provide all the details in the Terms and Conditions.

Funding rates and basis can turn negative for extended periods. How would you manage this? Will the APY go to 0% or negative, or do you have strategies to mitigate this?

Historically, funding rates for BTC and ETH perps on major exchanges have remained positive 90% of the time. Also, the differential of funding rates across exchanges has a more stable sign.

However, if they are unfavorable for extended periods, we have rules to unwind our positions and redeploy capital to other strategies.

What are the backtested (or live) volatility and maximum drawdown of this yield strategy?

Live since July 2025: Max DD = -0.035%; Annualized Vol = 0.2% both were calculated using daily performance data.

What are the redemption terms for xlBTC holders? Is there a lock-up period, a notice period, or potential withdrawal gates during high market stress?

We will launch with daily redemptions. A user will need to inform Excellar before a cutoff to receive their BTC the same day. This will be detailed in the T&C.

Once xlBTC is available on an AMM, users should be able to directly exit their positions.

We are not launching with a withdrawal gate, as initially our liquidity needs will be much smaller than the liquidity available in the market. To deal with market dislocations, we will use our credit lines with the prime broker to satisfy redemption requests.

Note: This may change in the future, and users will be informed well in advance before we make any changes to the T&C.

How would you manage a scenario where multiple large holders wish to redeem simultaneously while capital is deployed in term-structure or basis trades that are not instantly liquid?

This will be managed by our duration management strategy. We ensure that we have sufficiently liquid positions to take care of redemptions under stress.

Our client base is diverse with different liquidity needs and institutional sophistication, which should mitigate the risk of simultaneous large withdrawals.

We will have a liquidity ladder where a portion of the portfolio will be redeemable on a daily basis. If demand exceeds availability, we will either:

  • Use credit lines to satisfy requests, or

  • If needed, make redemptions T+3 to ensure orderly redemptions

These parameters will be explained in the T&C.

Will real-time attestation be via an on-chain oracle or an off-chain dashboard provided by a third-party auditor?

Day 1: Monthly attestations
Near-term: Daily NAV updates, transitioning to 15-minute intervals soon
Medium-term: Working to implement on-chain oracles to report the NAV

When it comes to institutional on-ramping, could you walk us through the user journey for, say, a new family office?

  1. Request on-boarding information through email provided on our website

  2. KYC/KYB process begins

  3. Once confirmed and T&C are signed, user provides a wallet address to whitelist

  4. User can then mint/burn through Excellar using these whitelisted addresses

  5. Currently, mint/burn requests are sent through a dedicated Slack channel for the user

  6. We are looking to integrate this through APIs and our website

How do you plan to bootstrap liquidity? Are you planning any incentive programs (beyond this grant) to encourage adoption for xlBTC as collateral or liquidity provision?

Yes, we are working on an incentive plan to encourage adoption for xlBTC.

We are also creating a pipeline of users, starting with hedge funds, who are interested in xlBTC.

We are currently in advanced conversations with a $10B+ IRA who is potentially looking to use xlBTC to offer their clients yield on their BTC holdings.

Thank you for clarifying that USDXLR is in testing until December. To help us understand the traction, could you elaborate on the relationship between the $3M+ processed volume and the current $20k-$100k AUM? Also, do you have LP commitments for the $50M pipeline post-full launch or where does that come from?

USDXLR Testing:
A Payment Service Provider (PSP) is using USDXLR to test if they can use it to earn interest on their float.

$50M Pipeline:
The pipeline is coming from hedge funds and high net worth individuals who have committed to seed xlBTC. They will start with test amounts and scale over the next few months.

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@kamik Thanks for sharing this detailed proposal and for engaging so thoughtfully with the questions. The idea behind xlBTC is genuinely interesting; a compliant, yield-bearing Bitcoin product could become a strong addition to Rootstock’s DeFi layer, especially if executed transparently and with real institutional participation.

That said, I’d like to echo what many are probably thinking after reviewing both the data and the responses: the vision is strong, but the verifiable evidence still feels early. Most of the yield generation remains off-chain, and some of the traction numbers (e.g. the $3M processed and $50M pipeline) are not yet visible in public data sources. For a product positioning itself as “institutional-grade,” transparency will be key, open-sourced contracts, an independent audit, clear proof-of-reserves, and reconciled metrics between claims and on-chain data would make a big difference.

From a grants standpoint, $100K is a meaningful amount of DAO capital. I’d be much more comfortable with a conditional, milestone-based structure, for example, unlocking a smaller first payment once a public testnet deployment, security review, and basic proof-of-reserves are available. That would align well with Rootstock’s risk-managed approach while still rewarding real progress.

Overall, the project has promise, the team has clear expertise, and the compliance narrative is valuable. Deliver a few concrete, verifiable milestones first, and I believe support will come naturally from the community.

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