Portal Brings Bitcoin-based DeFi to the Masses, Raises $8.5 million
You might be forgiven for thinking that Bitcoin, the most secure crypto network, has been all but left behind by the growth of DeFi, but a Layer 2 wallet and cross-chain decentralised exchange (DEX) solution from Portal aims to change all that.
The US-based company’s technology enables atomic swaps between bitcoin and other digital assets in what it claims is a “fast, secure and private” process. It has just raised $8.5 million for its self-sovereign, uncensorable DeFi platform built on top of the Bitcoin network.
The Portal fund raise includes some of the biggest companies on the crypto venture capital scene, with Coinbase Ventures, the venture capital arm of US exchange Coinbase, among them.
Other firms, crypto projects and individuals involved in the round were: ArringtonXRP Capital, OKEx, Republic.co, Shima Ventures, LD Capital, Monday Capital, GenBlock, Taureon, Autonomy Capital, Krypital, B21 Capital as well as the senior executives and founders of Ethereum, DFINITY, MobileCoin, Tether (USDT), Galaxy Digital, Bitcoin.com, Republic, Centre.io, Polymath, Æternity, Hedera Hashgraph, Blockstream, Reef Finance, GlobeDX, FIO, Portion, and 4K.
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Taking a bitcoin-native multichain approach
Achieving interoperability between different blockchains is a problem a number of projects are attempting to solve – doing so in a truly decentralised fashion is even harder, but Portal thinks it’s cracked it.
In comments accompanying the announcement, Michael Arrington, founder of ArringtonXRP & TechCrunch, said: “Decentralised cross-chain bridging is one of the hardest problems in crypto right now, especially as multiple blockchains gain real traction. We’re excited to see Portal’s Bitcoin-native approach to multichain transfers go live and provide an alternative bridging mechanism to the growing number of active onchain users.”
Brain Johnson senior director and head of operations at Republic Capital added: “Interoperability is a necessity for blockchain to bridge into the mainstream finance world. Republic Capital invested in Portal with this future in mind. Utilising Bitcoin’s security as an anchor, we believe the Portal and its team are in a unique position to build one of the leading bridges in DeFi.”
Portal platform leverages Fabric technology
Portal has developed its own protocol called Fabric, with which its Bitcoin-native solution is built. The platform enables crypto DeFi products to launch applications with futures, lending and borrowing functionality, as well as vesting and AI pricing among their features.
Portal may have an advantage over other DeFi platforms in that it is based on crypto’s most secure and trusted protocol – Bitcoin. As Portal’s website states: “Fabric lets you spin up your own secure layer two peer-2-peer network using Bitcoin blockchain as the trust anchor.”
Fabric is a Layer 2 (put simply, the software that delivers faster transaction times) and Layer 3 (the application layer) technology providing an open-source toolbox for deploying censorship-resistant layers on top of the Bitcoin base layer. It enables the completely private, off-chain execution of “smart contracts” for asset issuance, P2P swaps, staking, liquidity, derivatives, and much more besides.
Has Portal solved the ‘crypto trilemma’?
The backbone of the system is Portal swaps, where contracts incentivise liquidity providers and order book execution and exchange facilitators are rewarded commensurate with their effort.
Last week Solana went offline in a reminder of the risks involved with relatively untested DeFi networks and their underlying protocols.
Many projects have struggled with solving the “trilemma” of decentralisation, scaling and security – how to address issues with one point of the triangle without undermining another. Solana, for example, has been criticised by some for achieving scalability through sacrificing decentralisation.
Portal chief executive Eric Martindale tackles these difficulties while also safeguarding self-sovereign control, “By bringing a fast, peer-to-peer, Layer 2 exchange – with the speed of centralised exchanges but with privacy – Portal is delivering on the promise of self-sovereignty for everyone. The current centralised exchanges, false “decentralised” DEXs, custodially wrapped tokens, and censorable ecosystems all threaten Bitcoin’s promise of self-sovereignty. Fabric technology enables Layer 3 privacy on cross-chain transactions and eliminates the need for centralised custodians.”
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Why Portal Built on Bitcoin – token launch coming soon
On why they chose to build on Bitcoin, Martindale commented, “We believe Bitcoin provides the much needed financial infrastructure that the free, uncensorable internet-of-the-future will be built on, and although we are starting with a P2P exchange, our mission is to be The Platform for decentralised, peer-to-peer human interactions… be it communications, financial transactions, or social media.”
According to a press release from Portal, the platform uses Bitcoin’s “hash time-locked contracts” to ensure that users retain full control over the funds offered up in trade, preventing counterparty risk and loss of funds. It also incentivises anonymous, self-interested third parties to intermediate transactions between mutually untrusting peers while guaranteeing security.
The funding announcement comes ahead of Portal’s public token sale on Republic.co launchpad in October.
Stiff competition for Jack Dorsey’s Square Bitcoin DeFi initiative
Describing itself as the “first true cross-chain DEX that’s genuinely trustless”, it is able to eliminate the need for minting wrapped tokens such as WBTC and WETH and staking with intermediaries. Building DeFi on Portal promises the delivery if DeFi services with a “security model as robust as Bitcoin mining”. That’s a strong pitch and could help to inspire more interest in Bitcoin DeFi.
Square chief executive Jack Dorsey announced in July that the company was building an “open developer platform: for DeFi on Bitcoin, but little is known about how advanced the project is and the technology it might be deploying.
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