What is Sovryn?

Sovryn is a non-custodial and permissionless smart contract based system for Bitcoin lending, borrowing and margin trading. In short and oversimplified: Sovryn is bringing decentralized finance onto Bitcoin.

What features does Sovryn offer?

This is what you can do with Sovryn today:

  • Spot-Exchange : a low cost, low-slippage, AMM allowing instant trades between tokens.
  • Margin Trading : Creates up to 5X long/short trades, allowing users to borrow leverage from the lending pool.
  • Lending Pool : Allows HODLers to earn interest by lending tokens to margin traders and borrowers.
  • FastBTC Relay : Allows use of Bitcoin almost instantly with smart contracts and decentralized products, from any Bitcoin wallet.
Sovryn will continue to add features and additional functionality for users. You will be able to:
  • Perpetual Swaps - BTC backed perpetual swaps allowing trades with up to 20X leverage.
  • Bitcoin-backed stablecoin - users can use a USD-pegged token, backed by overcollateralized Bitcoin.
Please take a look at the roadmap to further explore what we have planned for Sovryn!

Can you describe some use cases for Sovryn users?

Let’s use two examples to describe different use cases.

Example 1: Stacking Sats and HyperHODLing

Alice, a bitcoin hodler, wants to put her BTC stack to work by lending them to a margin trade. Bob, a trader, is so bullish, he isn’t satisfied just to HODL. He wants to HyperHODL. He opens a long position on BTC, borrowing the funds from Alice. Alice and Bob do not want to move their BTC onto a centralized service and give up control of their keys or privacy. Using Sovryn, Alice issues a peer to peer loan straight from her wallet and Bob trades straight from his wallet. Alice is now stacking sats because she is getting paid interest. Bob is HyperHodling BTC. Both can do this without compromising their privacy, control or ideals.

Example 2: LegoLand

Carol is building a centralized exchange. David is building a decentralized hedging Dapp. Both Carol and David can integrate permissionlessly with the trading, lending and liquidity of Sovryn. In doing so, they gain instant access to more liquidity, more features and can provide greater functionality for both their users and those of Sovryn.

Why are non-custodial and permissionless important characteristics?

A centralized company, such as BitMEX and Binance, require you to send your Bitcoin over to them in order to trade. Even though you get a password to your account, this does not mean that you have direct control over your Bitcoin in their wallet. History is full with centralized abuses and Sovryn does not like that. Sovryn does not require you to send your Bitcoin to a centralized company in order to trade, lend or swap. With Sovryn, you send your Bitcoin to a smart contract that allows you to keep custody of your private keys, allowing you to withdraw your funds at any time. Sovryn is permissionless in the sense that no one can censor a transaction, ban your account or require you to undergo KYC before trading. You are Sovryn.

What smart contract platform is Sovryn built on?

Sovryn is built on the Rootstock(RSK) platform, which is a Bitcoin layer 2 smart contract protocol. To learn more about RSK click here.

What is RSK?

RSK is a Bitcoin layer 2 sidechain that provides for smart contract functionality using Bitcoin as it’s native asset. RSK is the most permissionless and censorship-resistant Bitcoin sidechain:
  • RSK is permissionless and its consensus mechanism is merge-mined PoW with about 40% of Bitcoin’s hashpower currently mining RSK. This means that RSK is mined by more hashpower than any other chain, except Bitcoin itself.
  • RSK’s two-way peg mechanism (called PoWpeg) is probably the most secure peg and multisig system in the cryptoworld. It uses a combination of HSMs and SPV proofs with multiple different functionaries. It layers PoW (through SPV proofs) over HSM security, providing additive security and decentralization. Unlike Liquid, it is permissionless and highly censorship resistant.
  • RSK sidechain is constantly improving the two-way peg. In the next iteration, Bitcoin miners will directly participate, making the peg even less federated and even more tightly coupled with Bitcoin PoW.

Will RSK have the same scaling issues and high fees as Ethereum?

RSK has a number of efficiencies over Ethereum, primarily with regards to storage handling and data structure (more info here). We however do not believe that these represent an order of magnitude difference. The main benefit in terms of scaling for RSK, is its ability to adopt those scaling solutions that prove viable in the future on Ethereum (rollups for instance). We have said that “Ethereum is our testnet” - and this is one reflection of that. To learn more about RSK we suggest the following links:

How is RSK different from Bitcoin on Ethereum?

Bitcoin on RSK has decisive advantages over tokenized Bitcoin on Ethereum (such as wBTC, renBTC):
  • RSK is not a competing chain, it is Bitcoin Layer 2.
  • RSK is Bitcoin native. You don’t need any other token other than bitcoin to use it and all fees are paid in Bitcoin. This is the first DeFi dApp where Bitcoin is the only “gas” you need to power it. This reduces the user friction of buying an altcoin so you can trade another.
  • RSK is non-custodial. It is not an IOU (like WBTC) and maintains censorship- resistance. tBTC is also non custodial, but is very expensive to make the conversion - and is likely to get more expensive in their new model (higher collateralization ratios). More generally, fees are much lower on RSK than on Ethereum.
  • RSK is secured by Bitcoin PoW, no need to understand or trust a different model. No need to be concerned that Bitcoin value on Ethereum could exceed ETH value.
  • BTC has the advantage of being the base asset on RSK. The loan to collateral ratios Sovryn will offer will be far superior to what is being offered for tokenized Bitcoin on Ethereum.
  • With the FastBTC relay, it is faster, cheaper and easier to move Bitcoin onto RSK than any of the Ethereum BTC-tokens. This alone is a 10X improvement. This will also be integrated with the lightning network, which is important to many Bitcoiners.

Are the smart contracts safe and audited?

Yes, the Sovryn protocol smart contracts are periodically assessed by independent security auditors. Here you can see the Audits.