Dear Current and Prospective Investors,
We’re gaining momentum on our goal: to facilitate the locking of native Bitcoin into DLCs for lending on Ethereum, Solana, Cosmos and other chains.
This past month, we moved into beta testing with Xverse wallet and Arcade.xyz on Ethereum. I wanted to take this opportunity to describe our trajectory and growth plans.
During our development process, we unexpectedly found that Bitcoin escrowed in a DLC is actually best represented as an NFT on other chains.
Since the escrow itself is non-fungible, the Bitcoin is best represented as a Real-World Asset via a non-fungible token such as ERC-721 or ERC-1155.
NFTFi is rapidly growing within DeFi and our solution is well-positioned to capitalize on this burgeoning market.
A recent Bankless report highlighted NFTFi as the #2 fastest-growing sector, with loan originations surging from $95 million to $437 million (source).
This growth is primarily driven by jpeg NFTs, but we are eager to introduce our solution to the market.
By integrating into these new NFTFi platforms, we will provide self-custodied Bitcoiners with numerous opportunities to generate attractive APYs while they hodl.
As Costas from Arcade.xyz aptly put it, "Bitcoin is highly-liquid, with over 10 years of historical data. dlcBTC lets us service lenders who want to earn a yield on passively-held Bitcoin."
To showcase the potential of our Bitcoin-backed NFTs, our lead engineer Robert Tera has recorded a 3-minute demo video that demonstrates the seamless integration of our solution with Arcade.xyz's platform.
We encourage all investors to watch the demo here: https://youtu.be/MsjzQwaQVjo.
This preview offers a glimpse into the future of Bitcoin-backed NFTs and the opportunities they present for both borrowers and lenders in the DeFi ecosystem.
Arcade has around $10Mn TVL today and serves as a great development partner. As our next step, we are going to 10X that. We are thrilled to announce a verbal agreement with ParaSpace, a leading NFT platform with $150Mn TVL.
ParaSpace is an industry leader backed by Tier 1 funds such as Sequoia, Pantera, Polychain Capital and Coinbase Ventures. Once our integration is complete, ParaSpace's platform will enable users to deposit Bitcoin-backed NFTs and take out loans in USDC and other tokens.
As an example, USDC that is borrowed this way can be used in lending protocols such as Goldfinch, a company that invests USDC into small and medium-sized businesses (SMBs) in developing countries to generate returns as high as 18% APR.
Thus, the combination of ParaSpace and Goldfinch will enable a novel way for Bitcoin holders to earn yield on their investments. Our efforts to make BTC composable will undoubtedly pave the way for innovative investment strategies that are beyond our current imagination.
Overview
The alpha version of our Xverse wallet integration is complete and has moved into private beta testing. Although we don’t yet have a formal launch date set, the joint product will be available soon. This feature lets XVerse users utilize native Bitcoin in DLC-enabled applications
Our first integration on Ethereum – into Arcade.xyz – is also in beta. Bitcoin can be locked to mint a Bitcoin-backed “Proof of Collateral” NFT, which can be borrowed against. Watch a demo here: https://www.youtube.com/watch?v=MsjzQwaQVjo and read more here: https://www.dlc.link/blog/minting-a-bitcoin-backed-nft-on-ethereum
ParaSpace, a leading NFT platform backed by top-tier investors such as Sequoia and Coinbase Ventures, has agreed to list our Bitcoin-backed NFTs once they’re ready. They have a beta of a new platform that lets people deposit NFTs to take loans in USDC and other tokens. See: https://app-dev.para.space/
Bankless just called NFTFi it's #2 fastest-growing sector, as loan originations grew from $95Mn to $437Mn. We’re excited to take our Bitcoin-backed NFT to market, which will be easy to integrate into these new platforms and will create a lot of ways for self-custodied Bitcoiners to generate APY while they hodl https://www.bankless.com/liquid-staking-crypto-gaming-perpetuals-nftfi
Sales and Business Development
To set context: DLCs offer multiple value propositions within CeFi and DeFi. Within both, we work with a variety of audiences ranging from Bitcoin-only and Bitcoin-first companies, as well as with multichain companies that are interested in adding support for native Bitcoin
On the DeFi side, we’re focusing on NFTFi. Escrowed Bitcoin is most similar to a Real-World Asset that lends itself extremely well to NFT lending and trading.
For example, a Bitcoin-backed NFT has a minimum floor price equal to the amount of Bitcoin locked, which makes it an extremely attractive asset to borrow against
More broadly in DeFi, we’re in conversations with a variety of financial and non-financial applications. Use cases for DLCs range from Bitcoin hashrate derivatives, sports betting, insurance and even ordinals lending and trading.
We’re keen to support a variety of developers, across both EVM and non-EVM chains, on our infrastructure
On the CeFi side, we primarily focus on prime brokerage, trading, treasury and settlement. Digital asset custodians are valuable partners that stand to benefit from extending their current service offerings to self-custodied entities such as miners and investment funds.
For example, Foundry Digital and NYDIG are both interested in exploring use cases focusing on institutional miners
As of today, we have 31 DeFi deals and 16 CeFi deals in pipeline. 11 deals are in a scoping phase and 4 are in proposal phase
Testimonials
A few recent quotes from our fans:
"Bitcoin is highly-liquid, with over 10 years of historical data. DLC.Link lets us service lenders who want to earn a yield on passively-held Bitcoin" – Costas, Arcade.xyz
"An elegant solution that reduces counterparty risk and expands lending and settlement options" – Patrick McLaughlin, Founder, Brane
"dlcBTC is making Bitcoin more composable & usable in DeFi" – Oliver Birch, Global Head, Chainlink BUILD Program
"You're sovereign Bitcoin for everything else” – Leading Bitcoin Investment Fund
Marketing and PR
To avoid confusion with other technologies, we are rebranding our “Bitcoin Oracle” offering to “Bitcoin Attestation Layer”. Unlike oracle networks or validators that power bridges, our Attestation Layer does not require external validators to secure users’ Bitcoin.
Instead, Bitcoin in a DLC is locked on-chain and is secured by the entire hashrate of the Bitcoin network. Read more here: https://www.dlc.link/blog/the-difference-between-a-dlc-layer-and-a-decentralized-consensus-network
Stacks is soon launching sBTC, their wrapped Bitcoin token. Read our case study that shows how DLCs and sBTC can be used in tandem to lock in large, long-running Bitcoin loans on mainchain while utilizing sBTC for liquidations https://www.dlc.link/blog/securing-bitcoin-loans-on-dlcs-with-sbtc-liquidation
If you haven’t already, read our two most popular content items: our Lightpaper at https://docs.dlc.link/whitepaper and our eBook “How to Enable Bitcoin on Ethereum Without Wrapping” at https://go.dlc.link/how-to-enable-bitcoin-on-ethereum-without-wrapping
Product
Our main focus in Q2 is on rolling out a great testnet beta launch to users, which sets us up nicely for a Q3 production launch
We’ve completed our ERC-721 “Proof of Collateral” deposit token. Using this, we’ve launched a demo application that lets users lock Bitcoin on-chain and mint an NFT on Ethereum that can be lent against or traded. Burning the NFT unlocks the underlying Bitcoin.
View our announcement and video here: https://twitter.com/DLC_Link/status/1626192635437191168
We are moving from alpha testing to beta testing for our DLC signing wallet library with the Xverse wallet.
In the next weeks, we hope for this integration to go live in the Xverse Chrome extension, followed by the mobile app shortly after that.
We learned a lot from this first integration and will be making some upgrades so this process is even faster for the next integration
Also in Q2 we’ll be partnering with several third-parties to operate attestors for the Attestation Layer. This will be a big step towards our vision of a trust-minimized smart bitcoin escrow
We are simultaneously launching into beta a (non-NFT) direct lending integration on the Stacks blockchain to the Arkadiko protocol. This demo video should be ready by the next Investor Update
Team
Our BD advisor Rusty Mason (formerly Head of BD for Thesis/tBTC) and I will be at Bitcoin Builder’s Conference and Bitcoin Miami. If you’re there, let’s meet up! Read more on Rusty here: https://www.dlc.link/blog/dlc-link-appoints-rusty-mason-as-business-development-advisor
Our advisor Seena Foroutan has been helping us refine our strategy to CeFi. At the moment, we’re in conversations with 12 CeFi institutions including FalconX, Galaxy, Gemini and others.
Common use cases include Bitcoin settlement for trading and treasury management
Finance and Fundraising
We are delighted to officially welcome Kieran Flanagan, CMO of Zapier and Sequoia Scout, to our community of investors.
With his extensive experience in product-led growth initiatives from Zapier and HubSpot, Kieran's insights will be invaluable as we continue to expand and strengthen our community.
This investment is also a personal milestone for me, as it’s the first time that I’ve received investment from Sequoia!
We have garnered sufficient soft interest to close our $750k target. However, we are experiencing a delay: two of our preferred funds are not yet able to invest, as they’re still wrapped up in legal setup around their fund.
While we wait, we are open to taking smaller investments (e.g. $50k-100k) from other funds or angels
For any funds that are looking to deploy $500k or greater checks, I look forward to circling back later in Q3/Q4 as we plan our next fundraise
How You Can Help
Please refer us broadly! We love to meet with CeFi and DeFi developers interested in implementing native Bitcoin escrow into their Bitcoin, Lightning, EVM, Solana or Cosmos applications.
Best,
Aki
PS – Missed any of our previous Investor Updates? Read the entire collection here: https://drive.google.com/drive/folders/1ZfXwo-YRDbyfjlcuD-1HZsH4ub4XsgHk
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