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Bitcoin DeFi app Sovryn is expanding to the Ethereum blockchain with the help of hybrid layer-2 network developer Build on Bitcoin, the two companies announced on Thursday.
Sovryn is a decentralized platform launched at the end of 2020 that offers lending, borrowing, and margin trading through smart contracts in the Bitcoin ecosystem. Built as a DAO on the Bitcoin sidechain Rootstock (RSK) that allows for the creation of smart contracts, Sovryn has been working to enhance Bitcoin with advanced DeFi capabilities.
The first project that Sovyrn will launch on Build on Bitcoin is a decentralized exchange (DEX) called Dex 2.0. The group claims this project will come with lower gas fees and faster transactions than competitors like Uniswap, and “unparalleled capital efficiency.”
“We've known Sovryn for a long time, and they've definitely been spearheading a lot of the early DeFi work in the Bitcoin space,” Build on Bitcoin co-founder Alexei Zamyatin told Decrypt. “Egan was the first person I called up when we started working on [Build on Bitcoin], trying to get him excited about expanding the Sovryn ecosystem and also trying to learn about the struggles they had.”
A layer-2 protocol refers to technology designed to mitigate congestion on a blockchain by creating a secondary chain that works in conjunction with the main network. For example, the Lightning Network is a layer-2 micropayments protocol for Bitcoin. Other examples of layer-2s include Arbitrum and Optimism on Ethereum.
"With Build on Bitcoin, you can use 350 [Ethereum Virtual Machine] wallets," Zamyatin said. "For the layman, that means you can pick almost any wallet; it doesn't necessarily need to be Bitcoin only or deal with UTXOs. It makes the whole thing much more user-friendly."
In January, Sovyrn launched BitcoinOS, which uses what the company called “sovryn rollups” to create a foundational layer for decentralized apps (dapps) on Bitcoin.
“By joining forces with BOB, we are not only expanding Sovryn's reach but also creating a DeFi ecosystem that is accessible to millions of Bitcoin users worldwide,” Sovryn co-founder Egan Yago said in a statement.
On Sovryn’s Dex 2.0, Zamyatin explained, users can select different networks via the user interface, such as the BOB Ethereum layer-2 protocol. He noted that the selection process is similar to choosing between Ethereum, Optimism, and Arbitrum on Uniswap.
When asked why developers are focused on bringing DeFi to Bitcoin, Zamyatin said it was because of Bitcoin's reliability.
"Bitcoin is the backbone of the entire Web3 ecosystem. If Bitcoin falls, everything else falls, if everything else breaks Bitcoin is still there," he said. "I think that is one of the main properties of Bitcoin—it's stable and robust. Bitcoin is predictable."
With renewed interest in the number-one blockchain by market capitalization stemming from projects like Ordinals and the approval of Bitcoin ETFs, Zamyatin is optimistic about the future of Bitcoin development.
“Bitcoin had its harsh times when nobody wanted to really engage with it,” Zamyatin said. “We both had a feeling that it was going to have a renaissance, and luckily, we were right.”
Edited by Ryan Ozawa and Andrew Hayward
Editor's note: This story was updated after publication to clarify descriptions of Sovryn and Build on Bitcoin.