Silicon Valley venture capitalist Tim Draper has spearheaded a $3.5 million funding round for Velar, a lean six-employee startup aiming to revolutionize Bitcoin’s decentralized finance (DeFi) capabilities.
Expanding Bitcoin’s DeFi Horizons
Founded by CEO Mithil Thakore, Velar is strategically focusing on creating decentralized finance tools on the Bitcoin network, traditionally known for its limited DeFi activity compared to Ethereum. The startup has announced plans to launch a perpetual swaps exchange, a critical development given Bitcoin’s architecture which does not natively support smart contracts essential for most DeFi applications.
Innovative Approach to Bitcoin DeFi
Velar’s innovation lies in leveraging the Bitcoin network for DeFi through a novel automated market maker (AMM) protocol, named Dharma. Inspired by popular Ethereum-based AMMs like Uniswap V2, Dharma aims to unlock the trillion-dollar potential of Bitcoin’s liquidity. The protocol’s mainnet launch introduces trading pairs such as STX<>aeUSDC and STX<>aBTC, marking a significant step towards integrating Bitcoin into the broader DeFi landscape.
The Funding Dynamics
This funding round not only includes Tim Draper but also notable participants like Bitcoin Startup Lab, CMS Holdings, and Black Edge Capital. Their investment is set to fuel the development of Velar’s suite of products aimed at enhancing Bitcoin’s utility in DeFi, providing robust security, and maintaining the network’s core principles of decentralization.
Funding Aims to Unlock Bitcoin’s DeFi Potential
Velar aims to utilize the massive, yet dormant liquidity of Bitcoin, currently estimated at around $800 billion, to replicate the success witnessed by DeFi on the Ethereum network. The new platform will employ Stacks technology, which enables the execution of smart contracts and DeFi applications directly on the Bitcoin network, thus leveraging Bitcoin’s robust security features without the need for a separate blockchain.
Mithil Thakore, co-founder and CEO of Velar, emphasized the platform’s commitment to integrating Bitcoin into the DeFi ecosystem. “Our goal is to facilitate a substantial portion of Bitcoin’s dormant liquidity for use in decentralized finance. This funding marks a significant endorsement of our approach and technology,” said Thakore.
A Look at the DeFi Landscape
The move by Velar is timely, as the Bitcoin network seeks to expand its functionality and attract more users to its ecosystem amidst growing competition from other blockchains. By increasing the types of transactions Bitcoin can handle, Velar is positioning itself at the forefront of a nascent market segment poised for growth as more investors and users begin to explore the possibilities of Bitcoin-based DeFi .
