19 Jan 2021
The Sovryn community has published the Black Paper v.1 to outline the details of their infrastructure solution for the next generation of DeFi.**
**Read the Sovryn Black Paper
The paper summarizes the work that Sovryn contributors have accomplished thus far and explains how the Sovryn protocol takes the monetary sovereignty that Bitcoin offers and builds a layer-2 operating system to ensure complete financial sovereignty to users worldwide.
DeFi has made massive strides in the past few years with the introduction of multiple, technological innovations, including:
- Collateralized, peer-to-peer lending for digital assets
- High APY staking on crypto coins
- Decentralized liquidity pools
- Off-chain cryptocurrency swaps
In 2020, the combined locked-in value of DeFi markets grew by 982%, sealing the industry’s fate with massive interest in the first round of DeFi expansion.
What is missing from DeFi?
The fact remains that crypto’s major asset, Bitcoin, has been largely left out of these first generation DeFi protocols. Why is that?
- Bitcoiners do not necessarily get excited about converting their BTC to ETH, taking the capital gains hit in order to try out some new yield farms or liquidity mining pools.
- Many of the DeFi platforms in existence today are reliant on centralized entities, such as exchanges, which chip away at Bitcoin’s promise of self-sovereignty.
- Along with DeFi’s fast growing popularity came rapidly rising gas fees for transactions, limiting the number of users able to participate. As a result, some of these DeFi protocols became less decentralised and more suited to bigger players.
Sovryn solves these challenges by creating a Bitcoin-native financial operating system that allows people to utilize their Bitcoin in decentralised applications:
- Without having to part ways with it.
- Without having to touch a centralized entity.
- Without giving up financial privacy and sovereignty.
Bridging Ethereum and beyond
The Sovryn protocol provides an infrastructure using layer-2 technologies for the next generation of DeFi. In this new era:
- Bitcoin is the reserve asset.
- Bitcoin-backed stablecoins and sidechain technologies provide low fees and secure scalability.
- Sovryn provides the financial operating system that bridges blockchains, expands the level of decentralisation, and keeps Bitcoin the sovereign money that it is - even when it’s put to use in financial applications.
Learn about Sovryn’s Fullstack Operating System for Bitcoin-native DeFi in the Black Paper
Sovryn Protocol use cases
- Permissionless trading tools for secure swaps, leverage trading, and crypto lending.
- EVM-Compatible smart contracts are integrated to provide a bridge from the Ethereum development community to Bitcoin layer-2.
- Everyday payments using Bitcoin-backed stablecoins as collateral.
- Scalability achieved through sidechains.
- Zero knowledge cryptography to ensure that verifications happen trustlessly with the privacy of both ends of transactions secured.
Sovryn today and tomorrow
The Sovryn protocol already provides tools for Bitcoin-native trading, lending, and leverage. Each of these financial applications are carried out in a permissionless manner and secured by the Bitcoin Blockchain through rootstock (RSK) merge-mining.
Soon, the Sovryn Bitocracy will enable anyone to build EVM-compatible smart contracts that are secured by Bitcoin Proof of Work (PoW). Users will be able to transmit the value of their Bitcoin for use in day-to-day payments, without having to sell their digital gold. With an operating system built specifically for Bitcoin-native DeFi, the sky’s the limit for building a truly decentralised financial system.
Anyone wishing to join the Sovryn Bitrocracy will enjoy Bitcoin-class security, privacy enhancing zk-proof shielded transactions, and DeFi products that allow them complete financial sovereignty while putting their Bitcoin to work.
Learn more details about the Sovryn tech stack, its use cases,
and the SOV token in the Sovryn Black Paper.