An organization providing a non-custodial Bitcoin loan platform has joined up with some of the blockchain industry’s biggest names to raise funds to build a native decentralized finance (DeFi) solution for Bitcoin.
Atomic Loans has raised $2.45 million in a seed round led by venture startup firm Initialized Capital. The funding round included Ethereum blockchain-solutions provider ConsenSys and digital-asset investment firm Morgan Creek Digital, among others.
DeFi for Bitcoin
Atomic Loans is essentially a platform that enables a two-sided marketplace for Bitcoin-backed lending. Users can lock their BTC natively in a non-custodial escrow on the Bitcoin chain and borrow stablecoins such as DAI or USDC. It works similarly to regular Ethereum-based DeFi lending platforms — but with Bitcoin.
The three-man team started the venture a year ago just as Ethereum-based DeFi was taking off. Realizing that Ethereum had the advantage of scripting languages and smart contracts, the team wanted to bring something similar for Bitcoin — and this seed round is its genesis.
The announcement summarized the current situation with a snippet from Anthony Pompliano’s ‘Off the Chain’ newsletter, stating that Bitcoin has been proven as a currency whereas the financial services infrastructure is unproven in a decentralized form. Conversely, Ethereum is unproven as a currency but has a proven DeFi ecosystem.
Partner at ConsenSys Labs, Min Teo, stated that Bitcoin will be a core component of DeFi activity, adding:
The vision of creating a parallel financial system that is permissionless and open to all is one that transcends across chains and communities…
Pompliano himself applauded the venture, adding that:
Atomic Loans is building the decentralized financial infrastructure that uses Bitcoin how it was intended.
The Status of DeFi, Today
The current status of the decentralized finance industry is heavily weighted towards Ethereum — but a Bitcoin DeFi ecosystem would be complementary, rather than competitive.
According to Defipluse.com, there is currently 2.7 million ether locked in DeFi protocols as collateral for decentralized lending and borrowing. In terms of total value locked in USD, the figure is at $713 million.
The dollar value has fallen in tandem with the price of Ethereum, which fell off the digital cliff last month during the COVID-19-induced market crash. The all-time high for DeFi dollar lockup was $1.24 billion in mid-February, a figure that has surged 330 percent since the same time the previous year. Since the peak, however, DeFi markets have contracted by 42 percent as collateral is liquidated.