Bitcoin and stablecoins are stealing the spotlight, and one company hopes to tap into both of them.
Bitcoin (BTC) and stablecoin narratives converge in the latest funding round. On Thursday, June 18, BitVault secured a $2 million investment to build a Bitcoin-backed stablecoin. The bvUSD stablecoin will launch on Katana, a new chain incubated by Polygon Labs and GSR.
GSR is also a strategic investor in the venture, along with Gemini, Auros, and Keyrock. The funding round came amid rising interest in stablecoins, especially after the Genius Act passed the U.S. Senate.
With the regulatory clarity introduced by the Genius Act, major banks and tech firms are now considering launching their own stablecoins. However, unlike fiat-backed assets such as USDC, bvUSD will be backed by Bitcoin reserves.
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BitVault leverages Bitcoin for DeFi
The creation of a Bitcoin-backed stablecoin is aimed in part at unlocking BTC’s liquidity for the DeFi ecosystem. Specifically, the protocol will enable yield generation with staked bvUSD, supported by crypto arbitrage strategies.
“Bitcoin was built for moments of fracture. BitVault was built to make it usable,” said Michael Kisselgof, Core Contributor of BitVault and VaultCraft. “We specifically onboarded GSR, Auros, and Keyrock as strategic investors that can also execute high yielding, non-directional strategies to create demand and deep liquidity for BTC-backed money.”
According to GSR, an investor in BitVault, the stablecoin venture holds significant potential for the Katana ecosystem.
“We’re seeing growing interest in BTC-backed stablecoins, especially those designed to integrate seamlessly into DeFi ecosystems,” said Alain Kunz, Director of GSR. “BitVault adds to Katana’s evolving ecosystem by introducing a new layer of stablecoin utility, enabling BTC to take on a more productive role within Katana’s high-yield DeFi stack.”
BitVault is a fork of Liquity V2, launched for institutional use in agreement with Liquity AG. The protocol features a permissioned borrowing layer, combined with core DeFi features.
Read more: Why stablecoin stocks will boom, then bust: Arthur Hayes
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