Cambi
Bitcoin-backed CDP powered by LatAm RWA
Created on 16th May 2025
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Cambi
Bitcoin-backed CDP powered by LatAm RWA
The problem Cambi solves
Latin America faces a critical financial paradox: 650 million people watch their savings destroyed by inflation while sitting on some of the world's highest-yielding investment opportunities. The Brazilian Real has lost 80% of its value over the past decade, yet Brazilian government bonds consistently yield 14%+ annually and private credit markets offer up to 30% returns. These yields exist due to structural economic factors, but remain inaccessible to both local retail investors and international capital due to complex regulations, high minimums, and operational barriers.
Simultaneously, Bitcoin whales and institutions worldwide have no liquid mechanism to earn returns on their assets without selling or engaging with opaque, centralized platforms that risk collapse and require long lockups. Most Bitcoin Layer-2 solutions offering yield are either centralized, employ zero-sum tokenomics, or fail to inherit Bitcoin's security properties.
Cambi Protocol solves this dual-sided market failure by creating the world's first permissionless Bitcoin-backed yield system powered by Latin American real-world assets. Built on battle-tested MakerDAO CDP architecture, users deposit Bitcoin, Ethereum, or stablecoins as collateral and mint yield-bearing synthetic assets: cmBTC (5-8% APY), cmUSD (14-18% APY), and cmBRL (20-25% APY).
Our breakthrough innovation lies in accessing USD-denominated Brazilian receivables with embedded currency hedges, eliminating foreign exchange risk while capturing emerging market yields. Unlike El Salvador's Volcano Bonds that require 5-year government-dependent commitments, Cambi offers flexible 3+ month terms through smart contracts, making high-yield emerging market exposure accessible to anyone globally.
The Cross-Collateral Yield Optimization Engine (CCYOE) represents our most significant technical innovation—intelligently redistributing excess yields across all protocol synthetics to maximize returns. When cmBRL generates exceptional yields from Brazilian bonds, excess profits automatically boost cmUSD and cmBTC returns, creating network effects where success in one asset benefits all users.
No existing protocol achieves this unified and adaptive yield optimization.
Brazil's position as the #6 global leader in RWA tokenization ($2B in on-chain assets, ahead of Japan and Germany) provides the infrastructure foundation, while our partnerships with established tokenization platforms like Liqi and DUX enable access to hundreds of millions in monthly receivables from agriculture exports, e-commerce, and creator economy sectors—the same assets Brazilian banks have successfully financed for decades.
Cambi transforms isolated problems into connected solutions: Bitcoin holders gain legitimate yield without selling, Latin Americans access inflation-beating savings tools, and global investors can easily access emerging market returns previously reserved for institutions with complex local operations.
On top of that Cambi's auto-liquidation hooks provide extra efficiency in synthetic asset markets through seamless integration with Uniswap V4. This innovative system leverages flash-swap mechanics to execute liquidations with near-zero capital requirements, removing traditional barriers to liquidator participation while ensuring optimal protocol health through instant position resolution.
When positions fall below required collateralization ratios, the hook orchestrates a complex atomic transaction: borrowing the required debt token via flash swap, liquidating the undercollateralized position, selling the acquired collateral, repaying the flash loan, and distributing profits—all within a single, gas-optimized transaction block. This elegant system creates a self-sustaining liquidation marketplace that eliminates the capital barriers, MEV exploitation, and gas wars that plague traditional liquidation mechanisms, while simultaneously enhancing protocol stability and capital efficiency for all participants.
High-level diagram of the protocol:
Liquidations in action (Mainnet):
Challenges we ran into
Our biggest challenge was realizing that our initial synthetic asset concept (Leprechaun), while technically sound, addressed a limited market. After winning the hackathon with the basic CDP system, we discovered the real opportunity lay in solving a much larger, more complex problem: bridging Bitcoin's idle capital with Latin America's inaccessible high-yield markets.
This pivot required completely redesigning our product from the ground up. The core challenge became foreign exchange risk management—how do you offer BRL-level yields from Brazilian assets to global markets without expensive hedging costs that would eliminate the yield advantage or taking large FX risks?
We spent days researching Brazilian financial markets, conducting outreach to dozens of potential partners until we discovered a specific segment: USD-earning Brazilian companies (exporters, tech firms, e-commerce and creators) that issue dollar-denominated receivables since they earn USD but have BRL expenses. This eliminated FX risk entirely since repayment occurs in dollars, but finding these partners required local market knowledge and relationship building.
Viabilizing cmBRL was straightforward—direct access to Brazilian bonds with local currency exposure. cmUSD proved considerably harder, requiring the USD-denominated receivables discovery mentioned above. cmBTC presented the greatest challenge: how do you create compelling yields for Bitcoin maximalists and institutions who are extremely risk-averse?
Building a wrapper on top of institutional Bitcoin lending so these actors can remain liquid during their staking periods was the first step, but we knew there was an opportunity to go beyond.
This led to our breakthrough innovation—CCYOE, our unified yield redistribution system. We spent countless hours modeling yield flows, running economic simulations, and architecting a system where excess yields from high-performing assets boost returns across all synthetics. The mathematics had to be sound: ensuring sustainable yields while creating genuine network effects where more users in one asset benefit all others.
Beyond the economic modeling, implementing CCYOE required sophisticated algorithms to handle dynamic yield allocation, real-time rebalancing, and isolated risk management across three different synthetic assets—all while maintaining the security standards required for institutional adoption.
The result is a protocol that simultaneously solves multiple problems across different user personas: Bitcoin holders get yield without selling or staying locked for too long, Latin Americans get inflation protection while also remaining liquid and composable, global investors access emerging market yields, and our unified system makes each user segment stronger by supporting the others.
What started as a simple synthetic asset protocol became a comprehensive bridge between two of the world's largest underserved financial markets.
Tracks Applied (2)
Stablecoins
DeFi
Technologies used
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