Velar Launches Bitcoin-Native Perpetual DEX on Stacks

Velar has deployed the first Bitcoin-native perpetual decentralized exchange (PerpDEX) on Stacks, marking a significant milestone in the integration of Bitcoin with decentralized finance (DeFi). This development allows for leveraged trading on Bitcoin, similar to Ethereum-based DeFi applications, but with the added security of Bitcoin’s network. Built on Stacks’ Layer-2, Velar’s PerpDEX enables smart contract functionality without altering Bitcoin’s base layer, ensuring that all trades and transactions are secured by Bitcoin’s blockchain. This on-chain platform allows users to maintain full control of their assets while leveraging Bitcoin’s security, eliminating the need for centralized trading platforms.

Velar’s PerpDEX employs Stacks, a Bitcoin Layer-2 network, to enable smart contract functionality without altering Bitcoin’s base layer. This Layer-2 solution ensures that transactions are secured by Bitcoin, decentralized, and cost-efficient. The platform also offers liquidity pools, enabling users to deposit Bitcoin to earn yields by providing liquidity to leveraged traders. This model amplifies capital efficiency and trading volumes, making the Bitcoin ecosystem more active.

The launch of Velar’s PerpDEX is a significant benchmark for Bitcoin’s DeFi ambitions. Traditionally, Bitcoin’s DeFi user base was limited to wrapped tokens like WBTC on Ethereum or early-stage lending protocols like Sovryn. With a natively perpetual dex, Velar demonstrates that Bitcoin is capable of supporting sophisticated DeFi applications without wrapping or bridging onto other networks. This can attract more liquidity to Bitcoin’s DeFi ecosystem, urge greater development of Bitcoin-native financial products, and make Bitcoin more desirable as an engaged participant in the DeFi economy, not just a passive investment.

Despite its potential, Velar’s PerpDEX and Bitcoin’s broader DeFi phenomenon face some challenges. Scalability remains an issue, as even Layer-2 solutions like Stacks are dependent on Bitcoin’s sluggish base-layer confirmation rates. Additionally, Ethereum-based DeFi protocols have a massive liquidity advantage, and increasing liquidity will be drawn to Bitcoin’s DeFi domain in the long run. User adoption is also a challenge, as the majority of Bitcoin holders still view BTC as a long-term value store and not an actively traded asset. Changing this attitude will be critical to DeFi adoption.

However, as the demand for decentralized trading and financial services based on Bitcoin continues to grow, Velar’s PerpDEX may mark the beginning of something different for Bitcoin in DeFi. With Bitcoin-based DeFi solutions gaining popularity, Velar’s success can encourage further innovation in the sector, bridging the difference between passive Bitcoin owners and active DeFi traders. This development could set the stage for a fresh wave of Bitcoin-led decentralized finance, making Bitcoin a more active player in the DeFi space.

Ask Aime: What is Velar's PerpDEX and its potential impact on Bitcoin's DeFi ecosystem?