Crypto Startup Velar Plans Perpetual Swaps Exchange for Bitcoin DeFi After Raising $3.5M

Velar's Plans for Bitcoin DeFi

Crypto trading startup Velar has announced its intention to launch a perpetual swaps exchange for Bitcoin's DeFi ecosystem.

Velar aims to leverage the Bitcoin network, which is unable to support DeFi smart contracts like Ethereum. However, they believe this limitation is changing with the proliferation of side chains and Layer-2s that derive their security from Bitcoin through techniques like merge mining.

The upcoming Nakamoto Release by Stacks, a Bitcoin layer upgrade, is of particular interest to Velar. This update will introduce sBTC, a synthetic bitcoin asset that will enable BTC holders to access the DeFi value of their holdings without giving up custody.

The Challenges of Bitcoin DeFi

Despite growing interest, Bitcoin DeFi is still more theoretical than practical at this stage.

One challenge is the long block times of Bitcoin, which can take up to 10 minutes for settlement. However, the Nakamoto Release will significantly reduce this settlement time to just five seconds, making it more suitable for trading purposes.

There is also hesitancy among bitcoin holders to embrace new methods of leveraging their assets. However, even a small fraction of BTC holders participating in Bitcoin DeFi could have a substantial impact given the widespread adoption of Bitcoin.

Venture Funding and Participation

Velar's $3.5 million venture funding round saw participation from various industry players, including Bitcoin Startup Lab, CMS Holdings, Black Edge Capital, GBV, Cypher Capital, Trust Machines SPV, Transform Capital, Maple Block, and Samara Asset Group.

While the infrastructure for Bitcoin DeFi is still developing to cater to a large user base, the progress being made indicates a positive trajectory for the future of decentralized finance on the Bitcoin network.