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While the decentralized finance (defi) sector can be traced back to the emergence of the Maker Protocol in 2014, it wasn’t until 2020 that it showed itself in the public consciousness. Defi was the hottest topic in cryptocurrency that year, and the amount of ETH blocked in defi protocols grew from $ 674 million in early January to over $ 15 billion by the New Year.
By encompassing products such as yield farms, lending protocols, and decentralized exchanges (DEXs), defi has become a great boon to Ethereum, as well as many of its first-tier successors, all of which have positioned themselves as scalable and low-cost alternatives. Today, Ethereum accounts for about 65% of TVL’s impressive $ 250 billion, and rivals such as Binance Smart Chain (BSC), Solana, Terra, Avalanche, TRON, and Fantom are in stern pursuit but lagging far behind.
Bitcoin does not participate in def wars, which is a consequence of the fact that it relies on smart contracts to automate the execution of agreements. Of course, the world’s most valuable crypto asset happily charts its own course, breaking its all-time high (ATH) at the end of 2020 and then making an incredible leap in 2021 amid growing institutional demand. However, there is a feeling that bitcoiners – especially long-term holders – have missed the defi train.
Bitcoin community launch
Next in line is Sovryn Origins, a Bitcoin-based decentralized launch pad operating under the Sovryn protocol. Created to help new projects launch their vision and raise Bitcoin funding, this community-driven venture is characterized by many of the familiar defi traits, namely self-government, censorship resistance, and unauthorized execution.
Sovryn Origins intends to foster a transparent and decentralized token sale supported by community governance, allowing mainstream bitcoins to actively vet projects and self-regulate to avoid fraudulent activity. This is possible thanks to Sovryn, a decentralized protocol deployed on Bitcoin’s own RSK smart contract network.
Sovryn relies on the principle that SOV stakers / investors vote on different protocols and projects. The mechanism itself is classified as a sub-protocol, the main purpose of which is to raise funds and engage the community. In fact, it is a Decentralized Autonomous Organization (DAO) with contributors from all over the world.
Through Sovryn Origins, projects aiming at building Bitcoin and Sovryn ecosystems can conduct their own token sales and community governance in a fully decentralized manner, with OG token holders having the right to determine which projects will be given the green light. The native launch pad token can also be used 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?
While Bitcoin has been indirectly used in defi for some time now, thanks to the Ethereum-based Wrapped Bitcoin (WBTC) token, many are logically wondering if Bitcoin itself is capable of serving millions of defi users. One of the main sticking points that is often cited is the relative slowness of the blockchain, as the average block time for Bitcoin is ten minutes.
However, due to the fact that Sovrin is built on the non-custodial RSK sidechain, it has a much faster confirmation time – about 30 seconds on average. Moreover, the fees on RSK are significantly lower than on Ethereum, a network that has suffered from severe congestion several times over the past 18 months.
While this is just the beginning for Origin (and the Bitcoin Defi ecosystem in general), the sub-protocol has already helped several projects raise funds in BTC. One, stablecoin aggregator BabelFish, managed to raise $ 5.8 million through Sovryn Origins in August, selling its token in just 30 minutes. Bitcoin-based defi has been an elusive desire for far too long. With projects like Origins, Sovryn, and RSK, a leading cryptocurrency asset is finally entering Ethereum territory.
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