The growth of decentralized finance, or defi, on public blockchains has been amazing to watch over the last few years. Many of the financial products we are used to in traditional financial markets, such as exchanges, derivatives and loans are now available on chain and usable entirely without intermediaries.
But most or all of this innovation has taken place on Ethereum and left out Bitcoin, by far the largest crypto-asset by network value. Into this void steps Atomic Loans, a startup working on bringing DeFi products natively to Bitcoin. Initialized is very happy to announce that we led their $2.45 million seed round along with participation from ConsenSys, Morgan Creek Digital, and our good friends and Initialized-backed founders Joe Lallouz and Aaron Henshaw of Bison Trails.
Most of what is called DeFi today lives on the Ethereum blockchain because Ethereum is the largest network with a fully programmable, Turing complete smart contract system. This includes some attempts to bridge Bitcoin synthetic assets to Ethereum such that Bitcoin-denominated tokens can be used on the Ethereum network. But developers haven’t been as drawn to building DeFi tools for Bitcoin, because it lacks Ethereum’s powerful smart contracts. That said, Bitcoin itself has a robust scripting language. This scripting language is the technology behind functionality like multi-signature transactions and atomic swaps.
Atomic Loans has set out to create DeFi products using Bitcoin’s scripting language as much as possible so that the results feel much more native to the Bitcoin community. Their first product uses scripts that function similar to hash time locked contracts (HTLCs) to provide non-custodial Bitcoin collateralized loans and I’m excited to say they’ve recently completed two sets of audits on their system and released a beta on the Bitcoin mainnet.
When I met Tony and Matt, Atomic Loans’ founders, it was immediately clear they were both entirely crypto-native and deeply technical. Both came from the University of Waterloo and ConsenSys with a deep belief in Bitcoin and their enthusiasm for building the future of DeFi was extreme. It has been great to watch them get the product to mainnet and engage the Bitcoin and DeFi communities.
As the most valuable asset by far Bitcoin is going to become a huge part of decentralized finance. If you would like to start putting your Bitcoin to work in a non-custodial way you should get in touch with Atomic Loans.