Forever Bitcoiners and Untrading Advantage: A Deep Dive into Wrapping WBTC into unBTC

In our previous discussion (Ep 019), we explored why Untrading might not be the ideal platform for certain types of traders, such as good NFT traders and long-term buy-and-hold investors.

However, after publishing that blog, an intriguing conversation emerged with a self-proclaimed "Forever Bitcoiner"—someone who believes in Bitcoin’s long-term potential and intends to hold it indefinitely.

This individual shared a fascinating strategy: wrapping and selling Bitcoin as unBTC within Untrading’s ecosystem, then using the proceeds to purchase more Bitcoin elsewhere, all while staying within Untrading’s rules.

This approach not only allows him to maintain his long-term Bitcoin exposure but also to earn additional rewards through Untrading’s Future Rewards system.

Today, we’ll dive deep into this strategy, exploring how wrapping WBTC into unBTC works, the mechanics of the transactions, and how this process can enhance returns for long-term holders.

Understanding the Long-Term Holder Mindset

Long-term holders, or "Forever Bitcoiners," are a unique breed of investors. They are deeply committed to their chosen assets, often viewing them as more than just financial instruments—they see them as stakes in the future of technology, economics, or societal transformation.

For these investors, selling their holdings feels counterintuitive, as it contradicts their long-term investment thesis. However, this doesn’t mean they can’t optimize their positions while staying true to their principles.

Untrading’s innovative mechanisms—such as Flows, Sliding Windows, and the Profit Expectancy system—offer a way for these investors to enhance their holdings without compromising their long-term strategy.

The Untrading Innovation: Wrapped Assets and Future Rewards

Untrading’s ecosystem supports wrapped assets, such as unBTC (wrapped Bitcoin), which allows users to tokenize their BTC holdings and participate in Untrading’s decentralized framework without directly selling their BTC.

This opens up a world of possibilities for long-term holders who want to maintain their Bitcoin exposure while earning additional rewards through Untrading’s unique profit-sharing model.

Here’s how it works in detail:

Step 1: Wrapping WBTC into unBTC

The process begins with wrapping WBTC into unBTC. WBTC (Wrapped Bitcoin) is an ERC-20 token that represents Bitcoin on the Ethereum blockchain.

When a user wraps their WBTC into unBTC, the WBTC is locked inside Untrading’s smart contract, and the user receives an equivalent amount of unBTC tokens. These unBTC tokens are now part of Untrading’s ecosystem and can be listed for sale on the platform.

• Key Point: The underlying WBTC is locked in the smart contract, ensuring that the value of unBTC is fully backed by the WBTC. This means that the unBTC token is fully collateralized, and its value is directly tied to the value of the locked WBTC.

Step 2: Listing unBTC for Sale on Untrading

Once the user has unBTC, they can list it for sale on the Untrading platform. When the unBTC is sold, the seller receives payment in a stablecoin like USDC or USDT.

At this point, the seller no longer owns the unBTC or the underlying WBTC—those now belong to the new buyer. However, the WBTC remains locked in the smart contract, ensuring that the unBTC’s value is still backed by the original WBTC.

• Key Point: The seller cannot unwrap the WBTC after selling the unBTC because they no longer own the unBTC token. However, they are entitled to Future Rewards each time the unBTC is sold later at a higher price.

Step 3: Receiving Future Rewards

One of the most compelling aspects of Untrading’s ecosystem is the Future Rewards system. When a user sells unBTC, they are entitled to a portion of the profits from future sales of that unBTC.

This is achieved through Untrading’s Sliding Window mechanism, which distributes profits to previous owners based on a geometric sequence.

How Future Rewards Work:

Each time the unBTC is sold at a higher price, a portion of the profit is distributed to previous owners.The distribution follows a geometric sequence, meaning earlier owners receive a larger share of the profits.

This ensures that the original seller continues to benefit from the rising value of the unBTC, even after they’ve sold it.

Step 4: Reinvesting Proceeds into Bitcoin – A Seamless Transition

After selling the unBTC on Untrading, the seller receives payment in a stablecoin like USDC or USDT. At this point, the seller no longer has any claim to the unBTC or the underlying WBTC—those now belong to the new buyer.

However, the seller can immediately use the proceeds to purchase another Bitcoin (BTC) from a traditional cryptocurrency exchange. This creates a seamless transition where the seller effectively maintains their Bitcoin exposure without ever truly giving up ownership of BTC.

How It Works:

• Sell unBTC: The seller lists the unBTC on Untrading and receives payment in USDC or USDT. 

• Buy BTC: The seller takes the USDC or USDT and purchases Bitcoin on another exchange (e.g., Binance, Coinbase, or Kraken). 

• Repeat the Process: The seller can then wrap the newly purchased Bitcoin into unBTC again and list it on Untrading, restarting the cycle.

• Key Point: This process allows the seller to retain their Bitcoin exposure while also benefiting from Untrading’s Future Rewards system. It’s as if the seller never truly sold their Bitcoin—they simply moved it into a different form (unBTC) temporarily to unlock additional liquidity and rewards.

The Expanded Meaning of Ownership: Maintaining BTC Exposure with Added Benefits

One of the most compelling aspects of this strategy is that it creates the illusion of continued ownership of Bitcoin, even though the seller has technically sold the unBTC. Here’s why:

No Loss of BTC Exposure:

By immediately reinvesting the proceeds from selling unBTC into new Bitcoin, the seller maintains their Bitcoin holdings. The only difference is that the Bitcoin is now held in a different form (e.g., on another exchange or in a personal wallet) rather than locked in Untrading’s smart contract.

Future Rewards Enhancement:

While the seller no longer owns the unBTC or the underlying WBTC, they continue to earn Future Rewards each time the unBTC is sold at a higher price. This creates an additional income stream that enhances their overall returns.

Risk-Free Enhancement:

Since the seller can always reinvest the proceeds into more Bitcoin, they are not exposed to the risk of losing their Bitcoin position. This makes the strategy risk-free in terms of maintaining Bitcoin exposure, while also providing the added benefit of Future Rewards.

Example Scenario: How It Works in Practice

Let’s walk through a concrete example to illustrate how this strategy works:

Initial Setup:

The seller owns 1 WBTC, the ERC-20 equivalent of BTC, which they wrap into 1 unBTC on Untrading. The 1 WBTC is locked in Untrading’s smart contract, and the seller receives 1 unBTC.

Selling unBTC:

The seller lists the 1 unBTC for sale on Untrading and sells it for $100,000 worth of USDC.

At this point, the seller no longer owns the unBTC or the underlying BTC. The new buyer now owns the unBTC, and the 1 BTC remains locked in the smart contract.

Reinvesting Proceeds:

The seller takes the $100,000 in USDC and immediately purchases 1 BTC on another exchange (e.g., Binance).

The seller now owns 1 BTC again, but this time it’s held outside of Untrading’s ecosystem. 

Earning Future Rewards:

Each time the unBTC is sold at a higher price (e.g., $135,000, $160,000, etc.), the seller earns a portion of the profit through Untrading’s Future Rewards system.

These rewards are distributed based on the Sliding Window mechanism, ensuring that earlier sellers receive a larger share of the profits.

Repeating the Process:

The seller can now wrap the newly purchased 1 BTC into unBTC again and list it on Untrading, restarting the cycle. This allows the seller to continue earning Future Rewards while maintaining their Bitcoin exposure.

Why This Strategy is So Powerful

This strategy is powerful because it allows the seller to have their cake and eat it too. They can:

Maintain Bitcoin Exposure:

By reinvesting the proceeds from selling unBTC into new Bitcoin, the seller effectively retains their Bitcoin holdings. This ensures that they continue to benefit from any future price appreciation of Bitcoin.

Earn Additional Rewards:

Through Untrading’s Future Rewards system, the seller earns additional income each time the unBTC is sold at a higher price. This creates a compounding effect that enhances their overall returns.

Avoid Counterparty Risk:

Unlike holding Bitcoin on a centralized exchange (e.g., FTX), where there is a risk of the exchange going bankrupt or being hacked, the seller’s Bitcoin is securely held in their own wallet or on a trusted exchange. This eliminates counterparty risk and ensures that the seller’s Bitcoin is always under their control.

The Result: Enhanced Returns with No Sacrifice

The result of this strategy is that the seller enhances their Bitcoin returns without ever truly giving up ownership of their Bitcoin.

They continue to benefit from Bitcoin’s long-term price appreciation while also earning additional rewards through Untrading’s ecosystem.

This creates a risk-free enhancement of their Bitcoin holdings, allowing them to maximize their returns without taking on additional risk.

Final Thoughts: A New Way to Think About Bitcoin Ownership

This strategy represents a new way to think about Bitcoin ownership. By leveraging Untrading’s ecosystem, long-term Bitcoin holders can maintain their exposure to Bitcoin while also earning additional rewards.

This approach aligns perfectly with the mindset of Forever Bitcoiners, who want to hold Bitcoin indefinitely but also want to optimize their returns.

As the decentralized finance (DeFi) ecosystem continues to evolve, strategies like this will become increasingly important for long-term holders.

By embracing innovative tools like wrapped Bitcoin and Future Rewards, investors can enhance their returns while staying true to their long-term investment principles.

The future of finance is here—and it’s for everyone. Whether you’re a Forever Bitcoiner or someone looking to enhance your investment strategy, Untrading offers the tools and flexibility to help you achieve your goals.