Decentralized finance (DeFi) has finally come to Bitcoin!
While many people had before theorized about it, Sovryn a decentralized DeFi protocol for Bitcoin has been able to go all the way by proving that unlocking Bitcoin’s liquidity is possible in a permissionless manner.
The global cryptocurrency community warmed up to the Sovryn project recently when their Genesis event for their $2.5 million token pre-sale reservation.
In truth, the concept of defi for Bitcoin brings with it so many advantages. Chief among them is access to Bitcoin’s vast liquidity without lifting a finger. Another is the creation of a new universe where the masters are those who understand and use decentralized technologies.
E-Crypto News reached out to Edan Yago, Co-founder Sovryn Protocol to talk about the future of the cryptospace with Bitcoin DeFi now possible. Here is what he had to say.
Edan Yago, Co-founder Sovryn Protocol
- Congratulations on your successful Genesis (token reservation) event! What are we to expect from you guys next?
We are using what we learned in the Genesis reservation sale to prepare the launch for our upcoming Origin SOV pre-sale. A waitlist is now available on the website. As far as further development, our upcoming release will include a decentralized referral and profit-sharing program, programmatic trading rebates, and liquidity mining v1.0.
2. How exactly does the Sovryn protocol work without the handover of digital assets?
It’s similar to how Ethereum-based DeFi protocols work; Sovryn users enable a web wallet such as Nifty or MetaMask and can trade, swap and stake from there, always maintaining ownership of their private keys. One difference is that instead of operating on the Ethereum Network, users select the RSK Mainnet on their webwallet. Since RSK is a Bitcoin sidechain, Sovryn users can participate in a DeFi system that is secured by the Bitcoin Network through merged mining of RSK.
3. Will the snazzy and cool stuff we have seen on the Ethereum and other decentralized finance (DeFi) platforms be available on Sovryn and its affiliated platforms?
Yes, our liquidity mining program is under development now, and our users can already earn from lending their BTC and several stablecoins. Perpetual swaps are also on the roadmap. We want to take the best of what DeFi has already offered, which is truly amazing, and essentially have Bitcoin bring it under its wings.
4. How will the Sovryn project change Decentralized Finance (DeFi)?
By creating a Bitcoin-native DeFi infrastructure that bridges to the Ethereum Blockchain (and other chains), Sovryn is combining the network effects of the two biggest Blockchains. We expect that this will pave the path to massive growth in DeFi due to the scaling potential, and more importantly, because people worldwide want financial freedom and financial privacy. They’re certainly not getting it by trading on Robinhood and other centralized exchanges, which are compelled to track and store their users’ personal and financial data and where users have no control over how the platform is run.
5.So many Bitcoin asset owners have locked their assets in for the long term. What will be the effect of the Sovryn project on liquidity in the cryptospace?
Sovryn is allowing Bitcoin HODLers ways to use their Bitcoin to build wealth that have never been seen in the DeFi industry. Users can HyperHODL, meaning they use their Bitcoin as collateral to borrow more Bitcoin (up to 5x).
So when I am trading with leverage, where is the Bitcoin that I am borrowing coming from? The answer is SuperStackers; users of the system who lend their Bitcoin to earn more Bitcoin.
With Sovryn, all loans are overcollateralized, protecting lenders from the risk of default. The interest rate is variable so that the more demand (relative to supply) there is for borrowing, the higher the interest rate that the system charges the borrowers and pays the lenders. If the annual percentage rate (APR) of interest is 6%, you can stack Sats and HODL at the same time by depositing your BTC into the lending pool. When your Bitcoin is in the lending pool, users can still withdraw it any time.
6. Can decentralized finance (DeFi) transactions occur on the Sovryn protocol without the possibility of loss (such as in the case of flash loans)?
While there are no 100% guarantees, Sovryn security features, including Bitcoin PoW secured transactions, overcollateralization, regular and transparent security audits, and advanced cryptography, set protections in place to enhance the experience of crypto traders. Additionally, when users stake our governance token SOV, liquidity is suspended thus reducing the possibility of flash loan exploits.
7. Are we going to see the emergence of flash loans on the Sovryn platform?
Flash loans allow more efficient arbitrage within the system, and we’ve already built out the functionality for them, but have not yet activated that part of the system.
8. What steps have you taken to prevent decentralized finance (DeFi) attacks that could hurt the Sovryn protocol?
The Sovryn Bitocracy is a qualified onchain governance system which helps to protect against DeFi attacks. Long term staking is incentivized and voting power is granted in relation to time staked. Early adopters and founders have a strict lock-up period and vesting over 3 years. Because liquidity is suspended during staking, flash loan manipulations are reduced. Our audits are available to the public, and we take that very seriously. We’re also running a bounty program for developers to earn SOV for testing out our systems.
9. We already have the existence of sidechains that are giving people access to Bitcoin assets. What is the difference between these sidechains and Sovryn?
Sovryn isn’t a sidechain. It is an application stack, and a decentralized financial operating system currently running on the RSK sidechain, which is merge-mined by Bitcoin PoW miners.
10. What is Sovryn bringing to the table that will enable it to lead the pack trying to unlock Bitcoin’s liquidity?
What Sovryn brings to the table is a decentralized, full-stack operating system for DeFi that can scale through the use of sidechains and bridges to other chains. At the same time, it unlocks the ability for Bitcoin HODLers to transact in many more ways without having to give up their private keys and full ownership. We’re moving from a chain-centric network effect to one that is asset-centric, with Bitcoin as a global reserve asset and sidechains, smart contracts and stablecoins providing the means for scale.
11. What are your plans for scaling once network congestion hits the Sovryn network?
Sovryn will be migrating to a rollup that aggregates offchain transactions to increase the blockchain’s throughput, providing massive scalability, lower fees, less network congestion, and faster transactions.
12. How can people get involved with Sovryn?
Our Discord server is where you see community members new and old doing everything from discussing tokenomics and getting the latest Sovryn news to playing in poker tournaments and participating in meme contests. All levels of involvement are encouraged; we have biweekly community calls in Discord, frequent AMA’s, and you can go to any public channel and ask a related question or provide your thoughts and feedback. People can contact an admin there if they’re interested in contributing to the Sovryn mission.
13. Are there any opportunities for developers to linkup their D’Apps and Smart contracts to Sovryn? How can they get it done?
Yes. In fact, several projects are already doing this. Composability works similarly to Ethereum.
14. Is there any special scripting language for smart contract functionality in Sovryn? Solidity exists for Ethereum, what exists for Sovryn?
Sovryn uses solidity.
15. Where do you see the Sovryn project in the next ten years?
Sovryn will become an extensible, financial operating system where the next generation of DeFi creators and developers can build financial applications for a truly permissionless economy layered onto the Bitcoin Network. We’ll create the infrastructure for trustless products and services that people worldwide can use for equity raising, mortgage lending, pensions, and beyond.
16. Do you think we will ever be able to unlock Bitcoin’s liquidity to an appreciable level this year?
We have multiple ways of developing Bitcoin’s liquidity in process now and in the roadmap, including the introduction of perpetual swaps, token launches, an aggregated liquidity program, roll up technologies, a massive marketing campaign, and a referral program.
17. What are your plans for 2021 for the Sovryn project?
Our roadmap for the year includes several releases that we’ve already accomplished and several enormous sprints are in the pipeline. Currently the roadmap looks like this:
Badger Release/Phase 1 – Mainnet Alpha Launch (complete)
With the Badger release, Sovryn went live on mainnet. Rootstock merge-mining was used to secure the system using Bitcoin PoW. Initially, the system was whitelisted to limit the use of the system to only a few early users.
Stoeffel Release/Phase 2 – Decentralized Governance (early 2021)
The Stoeffel Release will see the launch of the Sovryn Bitocracy system for decentralized Governance. It will also introduce the SOV token. In addition to the Sovryn Bitocracy, decentralized adoption systems controlled by the Bitocracy are deployed. These include:
- Decentralized Referrals and Profit Sharing
- Programmatic Trading Rebates
- Liquidity Mining v1.0
Peer Release/Phase 3 – Ethereum Mainnet (Q1 2021)
This release will see the launch of the Ethereum beacon and EthBridge v1.0. The Peer release will also launch programmatic sales, allowing the protocol to increase its treasury by permissionlessly selling SOV and other Tokens. The system will be fully permissionless and limitations on Liquidity and user activity will be removed.
Citadel Release/Phase 4 – Rollup Migration (Q2 2021)
Citadel will be a major release and provide the first glimpse of the full power of the Sovryn protocol. It will feature tighter integration with Ethereum, an improved Bitcoin peg, and scalability through rollup migration. With Citadel, the Sovryn protocol will not only be a tool for sovereignty, it will also become sovereign itself. It will boast its own interchain, capable of bridging to multiple blockchains, and leveraging their security assurances. It will also be more tightly integrated with Bitcoin PoW as its core source of security. Additional anticipated innovations are conditional payments, advanced order-types and futures.
18. Are we going to see more features on Sovryn this year?
Yes, we’ll be rolling out perpetual swaps, new lending types, stocks, and many other amazing features, all brought to you completely permissionlessly (with no KYC required).