3 hours ago
Lygos Finance unveiled what it calls the archetypal genuinely non-custodial bitcoin (BTC)-backed lending platform, aiming to alteration the crypto recognition marketplace with institutional-grade design.
The level is built connected Discrete Log Contracts (DLCs) developed by Atomic Finance, which Lygos acquired earlier this year.
DLCs enforce bilateral lending agreements straight connected Bitcoin’s basal layer, with an outer oracle attesting to facts similar BTC-USD prices, but not controlling the funds. Borrowers and lenders motion Contract Execution Transactions, meaning colony happens wholly connected the Bitcoin blockchain without custodians oregon smart-contract risk.
“True non-custodial means precisely this,” CEO Jay Patel said successful an emailed announcement connected Thursday. “No subordinate different than the borrower and lender tin determination the funds.”
Lygos supports up to $100 million, with BTC collateralized successful a autochthonal 2-of-2 publication and USDC/USDT issued connected Ethereum. The exemplary avoids wrapped bitcoin oregon synthetic collateral, keeping custody autochthonal connected some sides of the transaction.
During the 2021 crypto bull market, centralized lenders specified arsenic Celsius Network, Voyager Digital and BlockFi drew billions successful deposits by promising precocious yields. But these returns were often built connected risky, interconnected loans.
The strategy unraveled successful 2022, erstwhile the collapse of the Terra-Luna stablecoin and the bankruptcy of hedge money Three Arrows Capital (3AC) near galore of the large lenders exposed. Mass withdrawals followed, forcing firms to frost assets and record for bankruptcy. Customers mislaid much of their deposited funds, and the estimation of bitcoin lending took a terrible hit.
By enforcing agreements straight connected the Bitcoin furniture 1, Lygos said it tin reconstruct assurance with transparent, enforceable contracts and nary reliance connected custodians. The debut marks a caller effort to reimagine bitcoin recognition markets, this clip with non-custodial rails.
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