CEO Mithil Thakore of Velar: Building the DeFi Liquidity & Trading Protocol on Bitcoin’s Layer 2

The problem of low liquidity and high fees on Bitcoin Layer 2 platforms has been a major hindrance for traders and projects looking to use these platforms for asset swapping, trading, and launching. This can result in missed opportunities, slow transaction times, and increased costs. Velar is looking to solve this issue by facilitating seamless asset swapping, trading, and launches on the leading Bitcoin Layer 2 platforms, offering unmatched liquidity and flexibility.

—

Introducing DeFi Into The Bitcoin Ecosystem

Giving custody of Bitcoin to centralized exchanges has led to disastrous outcomes as we've seen in the past. Before the birth of Velar, Mithil Thakore ran a crypto focused hedge fund and due to the mismanagement of exchanges, he experienced first hand the consequences of these centralized platforms. This only solidified his belief in decentralized finance and the need for a secure and transparent solution in the Bitcoin ecosystem.
"As a long term solution, the only way to sustain and grow crypto is to build DeFi on Bitcoin, where people don't have to give custody of their Bitcoin to centralized exchanges."

Mithil Thakore, Co-founder & CEO of Velar
Mithil elaborates by sharing how he doesn't like the idea of bridging Bitcoin assets onto other platforms like Ethereum or Solana because they are centralized to a certain degree. These are the reasons for the creation of Velar - the one stop DeFi solution and liquidity protocol on Bitcoin. With that being said, the conversation drifted towards how BTC maxis may perceive this type of innovation on the Bitcoin network.

Addressing BTC Maxis' Concerns

BTC maxis are generally known for their strong beliefs in keeping Bitcoin as a store of value and not wanting to see it being used for transactions. However, Mithil and the team at Velar believe that incorporating DeFi on Bitcoin can actually enhance its store of value proposition. This is because DeFi brings in more utility for Bitcoin, allowing it to be used for more than just a store of value. Additionally, by providing liquidity to the Bitcoin ecosystem, DeFi can help improve its overall market stability and reduce volatility.
"Bitcoin is the most secure blockchain."

Mithil Thakore, Co-founder & CEO of Velar
Mithil sees Bitcoin as both a form of 'Digital Gold' as well as the Bitcoin blockchain itself. It's not just a store of value and currency but a secure blockchain that can be utilized for various applications, including DeFi. He believes that BTC maxis should embrace this potential and not be afraid of innovation and growth within the Bitcoin ecosystem. As the base of the financial infrastructure which will run parallel to the centralized model, Velar seeks to be as seamless as possible with Bitcoin while still providing the benefits of decentralization.

How Velar's Vision Can Come To Fruition

Despite the concerns of BTC maxis, Velar continues to pursue its vision of bringing DeFi to Bitcoin. The team remains committed to providing a safe and secure platform for users to access DeFi services on the Bitcoin network. The core Bitcoin network won't be changed but building around it to enhance its capabilities can bring in more value and potential for the network.
"The Bitcoin blockchain has limited capabilities."

Mithil Thakore, Co-founder & CEO of Velar
The way Mithil envisions it, DeFi on Bitcoin can be like adding a new layer to the existing infrastructure. Just as lightning network brought in instant, low-cost transactions for Bitcoin, DeFi can bring in new use cases and services for the network. It will also allow Bitcoin to compete with other smart contract platforms and blockchain networks that are currently dominating the DeFi space.

Bitcoin's Superior Security and Network Advantage

It's no secret that the Bitcoin blockchain has limited capabilities compared to other smart contract platforms. However, Mithil believes that it was the best option for Velar due to its security and robustness. With a market cap of over $1 trillion and being the most trusted and established cryptocurrency, Bitcoin serves as the ideal base for a DeFi platform.
"The keyword is using the security that Bitcoin blockchain provides."

Mithil Thakore, Co-founder & CEO of Velar
Mithil elaborates by saying this is the first reason for their decision to build on Bitcoin as the most "ethical" way to operate in the space. By leveraging Bitcoin's security, Velar can ensure that user funds and data are protected at all times. This is especially important in the world of DeFi, where hacks and exploits have become a common occurrence.

The network effect and PoW consensus mechanism are also reasons why Bitcoin was the best option for Velar. The network effect refers to the idea that as more people use and adopt a technology or platform, its value increases. With Bitcoin being the most widely used and recognized cryptocurrency, it already has a large network effect that Velar can tap into. "The proof-of-stake mechanism that other blockchains provide are not yet proven," say Mithil.

Understanding The Product Offerings of Velar

With a starting product of a basic automated market maker DEX, Velar aims to test the waters of what's possible on the Bitcoin blockchain. In just about 6 weeks, they received 165,000 users on their testnet. This made them realize that there was a genuine demand for DeFi on Bitcoin, and with this realization, they began working on their mainnet launch.
"We're building a suite of products with Bitcoin finality."

Mithil Thakore, Co-founder & CEO of Velar
From there, the team at Velar began building more complex products such as their perpetual exchange. This gives users the ability to use leverage for their trades, something that was not previously available on the Bitcoin blockchain. This brings on more risks but Mithil believes it will attract major firms such as hedge funds, who are competent in their risk management.

By catering to both retail and institutional "hunger" for DeFi on the Bitcoin blockchain, Velar is positioning itself to become a major player in this space. Although Mithil was quite ready to disclose their next suite of offerings, it's clear that they are constantly working towards providing more options and solutions for their users.

An L2 Agnostic Approach

Velar is an application layer built upon multiple L2s. This approach differs from other DeFi platforms that are built on specific L2s, which may limit their potential reach and adoption. By being agnostic to different L2 solutions, Velar is able to tap into a wider pool of users and provide more flexibility for their users. Stacks was one of the L2s mentioned during this interview as being a partner for Velar.

This agnostic approach also allows Velar to adapt to new L2 solutions as they emerge, ensuring that they are always at the forefront of innovation in the DeFi space. This puts them in a strong position for growth and adaptation in an ever-evolving industry. The Bitcoin ecosystem is still new compared to Ethereum, but with the rapid development of L2 solutions and projects like Velar, we can expect to see a surge in DeFi activity on the Bitcoin blockchain.

Mithil Thakore encourages L2s to focus on security as they continue to grow and attract more users. As the DeFi industry continues to expand, security will become an increasingly important factor and is core to Velar's mission. By partnering with reputable and secure L2 solutions, Velar is able to provide a safe and reliable platform for their users, but Mithil admits that it's still early days and there is always room for improvement.

Final Thoughts

Mithil Thakore dreams of a life for the next generation where they have the option between centralized banking and DeFi on Bitcoin through Velar. This is a bold vision, but with the growing demand and potential of DeFi on Bitcoin, it is not impossible. With their innovative product offerings and focus on user experience, Velar has the potential to tap into the network effect and become a leading force in the evolving world of secure decentralized finance.