29 Aug 2020
At the heart of the Bitcoin economy there are traders and lenders. All of these activities are currently being channelled through centralized services because great, easy to use, decentralized alternatives do not exist.
We came to Bitcoin for decentralization that empowers user sovereignty. Yet we must often give up that decentralization if we ever want to use our bitcoins. This absurdity must end.
Sovryn is a decentralized protocol for Bitcoin lending and margin trading. The protocol can be easily integrated into new and existing exchanges, or accessed simply through a web3 portal.
Sovryn will provide decentralized alternatives of all the most popular centralised Bitcoin finance tools.
Spot-Exchange: A low cost, low-slippage, AMM allowing instant trades between tokens
Margin Trading: Creates up to 5X long/short trades, allowing users to borrow leverage from the lending pool
Lending Pool: Allows HODLers to earn interest by lending tokens to margin traders and borrowers
SmartBTC Relay: Allows use of Bitcoin almost instantly with smart contracts and decentralized products, from any Bitcoin wallet
Bitcoin-backed Stablecoin: Users can use a USD-pegged token, backed by overcollaterilzed Bitcoin
Borrowing: Allows users and smart contracts to borrow tokens from the lending pool. All lending is over-collateralized Perpetual Swap: BTC backed perpetual swaps allowing trades with up to 20X leverage
Benefits to Bitcoin and Bitcoiners
Sovyrn benefits the entire Bitcoin ecosystem by providing easy-to-use, decentralized finance alternatives.
Privacy: as a decentralized service, Sovryn does not require user accounts, KYC or user tracking. Your privacy and pseudonymity are protected.
- Self-Custody: Don’t risk giving up your keys to centralized services that can be compromised or censored.
- Bitcoin-Native: No need to use other tokens or rely on the security of other chains, such as Ethereum. All fees are paid in Bitcoin. All transactions are merged with Bitcoin PoW.
- Increase Bitcoin Defense-in-Depth: Trusted third parties are security holes. The more the Bitcoin economy falls under the sway of centralized services, the more vulnerable the economy and it’s participants become to censorship and other attacks. Increase Bitcoin’s security envelope by increasing the depth of decentralization in the Bitcoin economy.
- Hyperbitcoinization: Increase the usefulness of Bitcoin and its ability to grow. Adopt the best innovations of other tech stacks and accelerate innovation in the Bitcoin ecosystem.
Stacking Sats and HyperHODLing
Alice, a hodler, wants to put her BTC stack to work by lending them to a margin trade.
Bob, a trader, is so bullish, he isn’t satisfied just to HODL. He wants to HyperHODL. He opens a long position on BTC, borrowing the funds from Alice.
Alice and Bob do not want to move their BTC onto a centralized service and give up control of their keys. Using Sovryn, Alice issues a peer to peer loan straight from her wallet and Bob trades straight from his. Alice is now stacking sats, and Bob is HyperHodling without compromising their privacy, control or ideals.
Carol is building a centralized exchange. David is building a decentralized hedging dapp. Both can integrate permissionlessly with the trading, lending and liquidity of Sovryn. In doing so, they gain instant access to more liquidity, more features and can provide greater functionality for both their users and those of Sovryn.
Decentralization is the key to user Sovereignty. By denying central points of control, it shifts the balance of power from centralized authorities, back to the users. Sovryn is being built with the goal of maximal decentralization, while still being able to provide ease-of-use and the ability to constantly improve. Sovryn will never have the same level of decentralization of Bitcoin but it’s also not trying to be the next global reserve currency.
We expect to continue engineering greater assurances of decentralization, as Sovryn evolves. In the early days, Sovryn will be decentralized by the following means:
- Governance Token: The SOV token will be a form of decentralized equity, “Dequity”. It’s holders will have the ability to manage the protocol by staking and voting. In doing so, they will earn the right to the revenue the protocol generates.
- Staking: By staking SOV, holders will be able to actively participate in management of the protocol, changes to features and distribution of revenues and rewards.
- Distributed Smart Contract Keys: A central point of control that afflicts almost all dapps is control of the smart contract keys. If one party controls those keys, that can make almost any change to the protocol, including stealing users funds. However, some degree of control is necessary, to allow for system and feature upgrades. Sovryn will distribute control of smart contract keys and place them under the control of the SOV holders. No one party will be in control.