Velar Startup Raises $3.5M for Bitcoin DeFi Perpetual Swaps Exchange

• Crypto Trading Firm Velar Raises $3.5 Million to Develop Bitcoin DeFi Tools
• Utilizing the Bitcoin Network for DeFi
• Betting on Stacks' Upcoming Nakamoto Release
• Potential Use Cases
• Realizing the Potential of Bitcoin DeFi
• Funding Round Participants

Crypto Trading Firm Velar Raises $3.5 Million to Develop Bitcoin DeFi Tools

Velar, a startup in the crypto trading industry, announced on Thursday that it has secured $3.5 million in venture capital. The funds will be applied towards the creation of a comprehensive toolkit for decentralized finance (DeFi) on Bitcoin$42,260 -0.64%'s emerging DeFi platform.

Utilizing the Bitcoin Network for DeFi

Velar's CEO, Mithil Thakore, revealed plans to introduce the first-ever perpetual swaps exchange using the Bitcoin network. The Bitcoin blockchain, being the foremost and most extensively used, lacks the ability to host the smart contracts required for DeFi, unlike its Ethereum$2,315 -2.42% counterpart. However, this situation is gradually changing with the increase of side chains and Layer-2s tied to Bitcoin. These networks, which are capable of managing smart contracts, draw their foundational security from Bitcoin via techniques such as merge mining, according to Thakore.

Betting on Stacks' Upcoming Nakamoto Release

Velar and Thakore are placing their bets on an upcoming upgrade by Stacks known as the Nakamoto Release. This improvement to its Bitcoin layer will feature the introduction of a synthetic Bitcoin asset, sBTC, pegged to the BTC, the original cryptocurrency. Thakore suggests that sBTC will offer Bitcoin holders the chance to unlock their DeFi value without relinquishing custody.

Potential Use Cases

One potential application could be in the trading sphere. Thakore stated that with the planned release of Velar v3, named Artha, in Q2 2024, individuals will be able to use sBTC as leverage for trading. Although the concept of Bitcoin DeFi is primarily theoretical at the moment despite attempts to materialize it, Thakore remains optimistic.

Realizing the Potential of Bitcoin DeFi

Part of the reason for the slow adoption of Bitcoin DeFi is the limitation of some solutions in adhering to Bitcoin's 10-minute block times, which are too sluggish for efficient trading settlement. The Nakamoto Release by Stacks aims to reduce this to five seconds. Thakore stressed on the importance of infrastructure availability to cater to the growing user base, despite the nascent stage of Bitcoin DeFi.

Furthermore, there is a certain reluctance among Bitcoin holders to engage with novel methods of leveraging their holdings. Thakore suggested that even a minor shift in this attitude could lead to a significant impact given the widespread use of BTC.

Funding Round Participants

Contributors to the funding round included Bitcoin Startup Lab, CMS Holdings, Black Edge$0.099 -1.12% Capital, GBV, Cypher Capital, Trust Machines SPV, Transform Capital, Maple Block, and Samara Asset Group, according to a press release.

Edited by Jonathan Stoker