We are excited to announce today that we have recently led the oversubscribed $2.1M seed round of Sovryn, with participation from Collider Ventures, Monday Capital and a couple of angels from the Bitcoin community.
Sovryn is the first Bitcoin-native DeFi platform. Users can trade bitcoin in a permissionless, non-custodial and censorship-resistant way using Sovryn’s lending and margin trading platform built on Bitcoin-backed RSK. RSK is the second strongest chain after Bitcoin and the most secure smart-contract platform in terms of thermodynamic security by leveraging Bitcoin’s proof of work via merged-mining.
Trustless and non-custodial BTC-native trading introduces a new DeFi paradigm with a large addressable market. Let’s elaborate.
The DeFi Craze
DeFi platforms allow people to lend or borrow funds from others, speculate on price movements on a range of assets using derivatives, trade cryptocurrencies, insure against risks, and earn interest in a completely decentralized and trustless manner. One could easily argue that 2020 is the year of DeFi on Ethereum. Stablecoins, decentralized lending protocols and margin trading platforms have seen a massive boost this year. Specifically, liquidity mining programs (also known as yield farming) on Ethereum drove both usage and token prices to all-time highs in Q3 as the space was flooded with increased capital and attention.
As of today, over $14.8 billion is deposited in various decentralized finance protocols on Ethereum, which represents more than a tenfold growth compared to the beginning of the year. One remarkable moment was Uniswap overtaking Coinbase Pro in daily volume in late August. Also, DEXs continue to grow at a much faster rate than its centralized counterparts, with Uniswap dominating the AMM market share with 58% as of today.
Demand for DeFi on Bitcoin
Massive trading volumes in bitcoin futures indicate demand for margin trading
As public interest for crypto assets and bitcoin specifically has been growing significantly over the past years, not least due to macro tailwinds, also demand for leveraged products has spiked. Trading volumes of bitcoin futures on centralized platforms have been growing tremendously over recent months, surpassing $200 billion per week in November on average (see chart below). Notably, an overwhelming use-case for BTC futures is trading with leverage.