First Pure DeFi Mortgage - Bordel Hackerspace

Transcript

Now. Perfect. Thank you. Hey everybody. Uh it's great to be back at ETC. Um let me start with a question. Um can you raise your hand um if um in case there was a there was an option for you to take a mortgage that wouldn't touch a bank, it would be completely in DeFi, where I just you do the standard thing that you do using Aave or Morpho or whatever and just like click a few buttons uh and get like financing for your for your home, would you would you do it?

Can Can you raise your hand if you if you prefer DeFi option against like going to a bank? Well, it's like 50/50. So, I guess like half of the people would still like prefer going to a bank for financing their home. Um so, today I'm going to talk about the the first ever DeFi mortgage, the option where you'd actually have to um leave your house, your apartment, and you could like get your your home financed completely using DeFi. Uh but first, let me start with a with a quick story. My name is Joseph. I've been in the space for quite a bit. Uh I've been to every single ETC except for the last one. Um or the one last year.

Uh I've been involved with couple projects, the Institute of Crypto Anarchy. I've been part of Ethereum Foundation for a bill uh for for a while. And started a Borderless Hackerspace back in 2020. Um majority of the story will actually be about Bordel. And I also started uh Pond DAO and uh own um so, I'm I've been basically like entrenched in crypto my entire career. Like 10 years in. Um I live and breathe this this space. The point is um I also as many others uh was looking for ways to uh to buy an apartment. And I kind of was sad to realize that no bank would would touch me because of my close

affiliation with crypto. So, um I've I've tried multiple times, but uh I wasn't too lucky. And this this talk is essentially about the the outcome of uh of the rejection. So, let's look back 2020. Um just got back from uh ETC in Paris. COVID started. Uh and as many of uh as as like many of the people in the in the community, I just like if you can't travel, you you'll just start messing out with uh random stuff. Um so, uh back in summer 2020, um not really out of necessity, but just like out of um um being bored with being stuck in in one place, uh I rented a basement room in Paralelni Polis. Has anyone Anyone here um

aware of what Paralelni Polis is or was? It's one person. Rest of you never heard of Paralelni Polis? Interesting. So, um but I'm I'm sure like most of you have heard of the merge, right? Is there anyone who doesn't know what the Ethereum merge stands for? Everybody knows what what the merge was. So, like during those times of the merge, you might have seen this this picture. It's actually from a Bankless tweet. Uh the first one shows you a NASA headquarters, and the second one shows you Bordel. This is the Hackerspace where the merge got uh tested successfully for the first time. So, you see like a bunch of people from the geth team. And this is it. That's the Hackerspace. It's one room.

Um like couple couple square meters, uh but uh funny things were happening there. Um in the back there is Mario Havel, the the guy behind the bordel.wtf, the the merge tracker. One of you're in um 2021 at LisCon, if I actually gave the first talk um about mortgages for crypto natives. And that's kind of how the whole story started. Um so, I've been in crypto for several years, but went to a bank, tried to get a mortgage. Um I applied for one. Um was making decent decent money, but I was rejected because uh my income was paid in crypto. I was paying taxes on it, but the bank didn't care, right? I was like too risky of a client. They looked at my Etherscan reports and and just like laughed in my

face. Like, that's that's nothing. Like, you don't you don't have anything. Um so, I got rejected. I started faking having a fiat income for almost 2 years. I eventually like even switched my contracts so I wouldn't be paid in ETH uh to being paid in fiat. And slowly I built up a credit score to the bank the the online banking would tell me like, "Hey, you can you can borrow up to like 6 700k. Um we're fine with this based on your credit rank." So, went back to the bank, applied. Um there was a last KYC form, which literally asked me something like, "Do you own, trade, or are anyhow exposed to cryptocurrencies?"

And today like I just like gave them my you uh Ethereum Foundation contract. So, that was that was the end of the story for me getting a getting a mortgage. So, I thought like, "Okay, what are my options?" Well, um I can't get a standard mortgage. Um I can get a DeFi loan. So, I could use Aave um or MakerDAO at the time. But it's too risky, right? Because that can get you liquidated like anytime during like a 50% crash. Um and with it within the setup, I essentially started working on um Pond DAO and like Pond, and that was that was the substrate of the of the technologies needed for actually having something like a DeFi mortgage um to to happen on chain because well, it simply didn't

exist. Um so, with that uh there is one more thing that happened. It was 2023. We hosted our uh second uh EthPrague. And uh there was a community clash. So, we had to leave. Um Bordel was no longer welcomed in Paralelni Polis. So, we essentially like packed my two boxes and took down sign uh from the door and left. And then the Bordel Hackerspace was homeless. Uh the other person um their co-founder Mario Havel, he he wanted to open one in Barcelona. I was like looking for places for quite some time. We were thinking about how to finance this. And in the meantime, we were building uh Pond DAO and the entire um peer-to-peer lending infrastructure.

Um that happened for essentially like few years um where we just, you know, we're sitting and talking about it. Um and meanwhile, uh time was passing. Uh nothing really like happened. There was not even not even like people who were part of Bordel before. They kind of like gone to different different Hackerspaces. But eventually last year, 2025, um kind of like hitting the hitting the crypto lows, uh we didn't know it it may go it may go below that, but uh we started talking about reopening the Hackerspace again because well, like all of the Hackerspaces um in Prague, they they hate they all hate crypto. Like, if you're in crypto for sufficiently long and like you're also part of like any other open-source community, then

uh I guess it's it's kind of a public knowledge that the the standard open-source communities, they don't they don't like crypto. It's all scams and like rug pulls, and they don't want to be affiliated with it. So, there there isn't actually any like friendly Hackerspace in Prague where the community could like meet and um um and just talk about the stuff that we like. So, we started talking about opening one. And then 1 year exactly 1 year ago, it was actually April 1st. We we launched the first uh interface for for DeFi mortgage. It was a joke. Uh it was a AI agent trying to raise money to buy his own server so he could leave AWS.

Uh we made a few people laugh. We also made interface, but we didn't have the contracts. Uh throughout summer, we were prototyping it. And then finally, uh we decided to launch it at um Devconnect in Buenos Aires uh last year. Um so, the goal was um create a proper DeFi mortgage. Like, what should what should be true about such a contract? So, A, it has to be fixed rate. The rate has to be guaranteed for long enough. Um so, it has to be essentially at least 5 years long, and we have to build it on chain that we can trust to be existing in 5 years.

Just like I mean, it's it's hard to you know, it's it's hard to assume any any other chain that maybe Bitcoin or Ethereum will be live in 5 years. Um so, the the choice was obvious here. Um then it has to limit the risk. Like, you don't want to take a mortgage and put your life savings on uh on the table and um risk that you will get wrecked in 1 day 50% dump that recovers the next day. So, uh the traditional like price-based liquidation wasn't an option. Also, with price-based liquidations, the thing that you need is an oracle. And you have to make um um you have to be able to say that the particle oracle that you pick will be also functioning in 5 years. That's another thing uh that's that's kind of hard to hard to assess unless you run

the entire or oracle infrastructure yourself, at which point like you're just introducing more and more components. Uh there also has to be no human factor. So, you could you could like skip the price oracle if you could like trust have a trusted setup of people uh being able to say like this should or shouldn't be liquidated. Um and the third component also has to be open. It has to be tapped into the rest of DeFi. It has to be permissionless. No KYC. So, the goal for the Hackerspace in Prague was let's try to raise uh quarter million, 250k for 5 years at a very low rate uh at 2.5%. I'm going to explain why the rate was so low. We actually started to one, and we bumped it to 2.5.

This was um November last year. The standard Aave rate was something like 3.11 3.2 on USDC. So, it was slightly lower. Um but um for a certain group of people who are like interested in just sort of making these finance things happen, uh it was it was sufficient. So, how this entire structure looked like? So, the first step was crowdsourcing the the money, crowdsourcing the mortgage. So, first, uh we deployed a 4626 vault and the lenders, the contributors, could contribute USDC to the vault. The vault would by proxy deploy the money into Aave, securing the baseline yield for the time of the crowd loan being being running, which was 90 days.

Then, once the minimum threshold is matched, the borrower, in this case was a multi-sig, it was a safe wallet of about six people, could pull in the collateral together. The collateral in this case was wrapped ether 5 ETH, so a yield-bearing asset at LTV of 75%. Then, once the loan is executed, the money would be drawn from Aave, would go to the multi-sig. So the the real estate, the actual hacker space could be could be bought. At which point, there's the the second factor. The the lenders would not only get the the rate, not only get the interest, which wasn't really interesting, but it would get perks. So, they get like membership, they would get free

server hosting in the hacker space, they could host their own events. Actually, the the non-monetary perks were more interested at the yield itself yield itself. Like, I guess nobody really here is interested in like getting 2.5% on your dollars because like you can get lot more elsewhere. And we also didn't want to trigger any like regulatory concerns because like well, obviously, you are making less than the standard rate. So, this was more of a community fundraiser really than than like a standard financial product. So, once the loan is created, then the repayments are triggered. So, the borrowers are required to keep sending regular installments, in this case monthly installments, back into the pool from which the the lenders can

draw their the installments, the repayments plus yield. And this would be lasting for 5 years. So, this is basically the structure. The There is no like direct connection to the real estate itself. The real estate comes after and there's the entire structure around it. So, it's still an over-collateralized loan on chain, which is a slightly different mechanics than what you're used to on Aave or Maker etc. So, how it went. So, on the day one, when we announced the project, we had an instant commitment of about 80K. There were like perks kind of scheduled based on the the money contributed. So, you were getting like extra perks like tickets to eat Prague and like VIP membership

lasting like indefinitely and so on. And the first day was awesome. We just announced it and like people in the room were actually like taking out their phones and contributing. Uh and then, 2 months have passed and nothing happened. So, so we were like at 85K out of the 250. Um Like people are kind of losing hope. Nothing was really happening. Um Then, 10 days later, we actually found the proper spot and that's kind of that got people excited again. So, we found a nice location that we could buy with actually way less cost around like 150K.

Um and we started talking about it more publicly again. It was like few days before the loan would actually expire. Um One day before or actually 12 hours before the um the expiration of the entire loan, we we raised it from like bunch of people from from the ecosystem who were actually interested in just making it happen. Um but until the very very last moment, it was it was kind of a chase to see if we're if we're going to make it or not.

Anyways, we found it. We found a proper spot and we raised enough money to to be able to execute a loan. Um We found a bunker. So, we're actually buying a bunker to open up a hacker space called Bordel in Prague. Um it has everything, everything you can dream of. There are no windows, so you know, like only Linux users are allowed. Um There is a there is a proper there is a proper like treasure door, there is a there is a decontam decontamination shower right at the entrance.

There is the entire ventilation system like built in, I don't know, like the '60s. It still runs, it still functions. And there is a secret hatch as a backup entrance just in case the main entrance would be blocked. It's 17 m. It's it's awesome. We're definitely moving in there. And yeah, if you if you come to eat Prague, be happy to show you around at the at the opening party. There are also a few more surprises. So, because like crypto is crypto, the very last person who wanted to support the Bordel hacker space actually made a mistake and instead of using the deposit function using the interface, they they decided to go the

the harder path and actually execute a contract directly. Um but instead of using the function, they just made a simple transfer into the vault. So, they effectively donated $10,000 to the lenders. So, for the lenders, the rate that they're getting back isn't actually 2.5% but close to 5%, which like at the point where the Aave variable rate was like 2.1, starts actually making a lot of sense. So, this is this is like closer to what you could expect from from a mortgage type of loan.

Um so, now we have 5 years to return the like the 190 something K. The the Bordel case, I'm I'm sure will will will happen as as promised. There is more paperwork to be done. Right now, what happens on the legal side is that we're setting up setting up a legal entity. Um all of the people who contributed collateral, the crypto collateral for the loan to be executed, get a fair share in that legal entity. So, if someone committed like 50% of the entire collateral, they would get they would get 50% of the shares.

Plus, there is an extra clause. So, nobody wants to nobody of the of the donors they want to lose their crypto, right? They they basically have their own assets at stake to make sure the repayments happen. Um But in case any of them would have to or would be willing to start repaying the loan on behalf of all of the others, they'll just get more shares, more company shares minted. So, the legal entity buys the hacker space and the shares are kind of mapped on the contributions made regardless of like whether that's the collateral or the repayments made.

The repayment, by the way, is something like $3,000 monthly. It's maybe slightly more than than the rent that would be paid for such a space in Prague. At the same time, we only have like 5 years to pay this and afterwards it's just ours and we don't have to worry about making making any repayments or paying the rent. Um So, that's that's about it. The plans that we have with this is um basically fund more community spaces. So, even though this could be used for your own like private mortgage, it would have to be like fundraised and or we would have to find find a political lender for this, we want to work with communities. We want to work with network state communities and like community housings

and just make them use this tool. It's all open source. The entire contract, the entire the entire interface is all open source. So, you can just like fork it and use it yourself. At the same time, if you reach out to us, we're happy to set this up with you. We don't charge any fee. The the point is we want to make at least like 10 of these deals to happen worldwide before we even start thinking about monetizing this. And yeah, just um get the QR code. There is my Telegram, you can reach out to me. You can also find out more about the loan at loan.bordel.wtf.

You can also find out more about Own Labs, which is the team behind the mortgage. Um and yeah, if you have any questions, I think we might have two more minutes for them if I'm not wrong. Thank you. >> [applause] >> There was a question? So, for the for one-off mortgage, it's relatively straightforward because people seem to know you, they know the work. But how would you go about quantifying the risk profile of a random mortgage on a random open

network? You mean like this type of a mortgage where crypto sits as collateral? So, like the profile of the lender would be someone who is willing to take a bet um for possibly buying the collateral asset at a at a discount compared to current price by the time the loan by the time the loan concludes. So, the point here is the entire collateral is always at risk if you start missing repayments. So, even if the first repayment is missed, then the borrowers lose their entire collateral. If the last repayment is missed, they still lose the entire collateral.

Um So, the the worst-case scenario is like if the collateral price keeps dropping faster than the loan is being repaid over time. And because we cannot make any assessment about like the price of the collateral in like 5 years or like 10 years, um we we require the entire thing to be staked like for for the entire duration, not being like withdrawn as you as you repay, at least currently. So, yeah, like a person like in our case, definitely people who were like long on ETH that like wouldn't mind buying ETH at a 25% discount compared to today's price.

Okay, yeah, that makes sense. Thank you. And I think that was it. So, thanks a lot again. And again, if you're interested in getting your own mortgage, check this out. >> [applause]