The blockchain holds about 3 trillion dollars in assets of which about 400 billion are "lost" assets.
These "lost assets" exists on the blockchain because its owners have lost access to it so it is stuck on the blockchain forever. Nobody can access these because the blockchain is secured as such and if you lose your password or do something wrong, your assets are lost forever.
We all know of the guy who had his bitcoins access information on a hard drive and then threw out his hard drive by mistake. They searched for his hard drive at the dump site but could not find it. It is estimated there are coins there lost that were to the tune of 1 billion British Pounds.
The lost assets however still do exist on the blockchain and as such it continues to earn interest. Sathoshi himself has about 1 million bitcoins held in limbo and has not been touched since he dropped out of the world and went dark.
Although the primary assets cannot be accessed, the interest however continues to be earned and can be taken out by using a smart contract flash loan.
A flash loan can only be taken out if what we borrowed is paid back in the same transaction. This way there is no loan outstanding because it is paid back right away. What we do is we use the loan taken out to generate interest that gets paid out 25 days later and return the loan instantly once the smart contract is established.
The "lost bitcoins" are thus used as collateral to secure the flash loan and once the smart contract is established the collateral is retired as it is no longer required. This means our loan liability is liquidated the moment the smart contract is created. The smart contract replaces the "lost bitcoins" as the collateral so the loan liabilities can thus be retired.
We then just wait 25 days for the smart contract to pay out the interest.
Our smart contract generates the interest to be continuously paid out every 25 days for a total of 250 days. That is 10 tranches of payouts of interest over 250 days.
- Total assets: ~3T
- Lost assets: ~400B
- Collateral: “lost bitcoins”
- Flash loan repaid same transaction
- Payout cadence: every 25 days
- Duration: 250 days (10 tranches)