Although the decentralized finance (defi) sector can be traced back to the emergence of the Maker protocol in 2014, it was not until 2020 that it exploded like a hydrogen bomb in the public consciousness. Defi was by far the hottest story in crypto that year, with the amount of ETH locked in defi protocols growing from $674 million at the start of January to well over $15 billion come New Year.
Encompassing products such as yield farms, lending protocols, and decentralized exchanges (DEXs), defi has been a major boon for Ethereum as well as its legion of layer-1 successors, all of whom have positioned themselves as scalable, low-cost alternatives. Today, Ethereum commands around 65% of defi’s eye-watering $250 billion TVL (total value locked), with rivals such as Binance Smart Chain (BSC), Solana, Terra, Avalanche, TRON, and Fantom in hot pursuit – yet well off the pace.
Bitcoin has been conspicuous by its absence from the defi wars, a consequence of the latter’s reliance on smart contracts to automate the execution of agreements. Of course, the world’s most valuable crypto-asset has been happily plotting its own course, streaking past its all-time high (ATH) at the end of 2020 before going on an incredible tear in 2021 amid surging institutional demand. Still, there’s been a sense that bitcoiners – particularly long-term hodlers – have missed the defi gravy train.
Kickstarting the Bitcoin Community
Step forward Sovryn Origins, a bitcoin-based decentralized launchpad powered by the Sovryn protocol. Created to help new projects kickstart their vision and raise funding natively in bitcoin, the community-centric venture is characterized by many of the familiar touchstones of defi, namely self-governance, censorship resistance, and permissionless execution.
Sovryn Origins intends to facilitate transparent and decentralized token sales supported by community governance, enabling everyday bitcoiners to proactively vet projects and self-regulate to avoid scams.This is made possible by Sovryn, a decentralized protocol deployed on bitcoin’s very own smart contract network RSK.
Anchored and supported by the Sovryn Bitocracy – where SOV stakers/vesters vote on various protocols and projects – Sovryn Origins is classed as a sub-protocol, with its principal objective being fundraising and community engagement. In actual fact, it is a Decentralized Autonomous Organization (DAO) whose contributors come from all over the world.
Through Sovryn Origins, projects seeking to build in and around the bitcoin and Sovryn ecosystems can run their own token sales and enact community governance in a completely decentralized fashion, with OG token holders holding sway over which projects are given the green light. The launchpad’s native token can also be deployed as a queuing mechanism to avoid costly gas wars. Sovryn itself, meanwhile, facilitates activities such as bitcoin lending, borrowing and margin trading.
Are Bitcoin and Defi Really Compatible?
Although bitcoin has indirectly been used in defi for some time thanks to the Ethereum-based Wrapped Bitcoin (WBTC) token, many logically wonder whether bitcoin itself is capable of serving millions of defi users. One major stumbling block often invoked is the blockchain’s comparative slowness, since bitcoin’s average block time is ten minutes.
Because Sovryn is built on non-custodial sidechain RSK, however, it enjoys much faster confirmation times – around 30 seconds on average. What’s more, fees on RSK tend to be considerably lower than those on Ethereum, a network that has repeatedly suffered from heavy congestion over the past 18 months.
Although it’s early days for Origin (and bitcoin’s defi ecosystem more generally), the sub-protocol has already helped several projects raise funds in BTC. One of them, stablecoin aggregator BabelFish, managed to raise $5.8 million through Sovryn Origins in August, selling out its token in a mere 30 minutes. Bitcoin-based defi has been an elusive desideratum for all too long. Thanks to projects like Origins, Sovryn and RSK, crypto’s leading asset is finally entering Ethereum’s territory.