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Atomic Loans Comes Out of Stealth: Non-Custodial Bitcoin-Backed Loans

Atomic Loans not only unveiled its Bitcoin-based DeFi lending system but also that the firm just raised $2.45 million USD in a fresh seed funding round.
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So far, the Ethereum community has been king of the hill when it comes to the decentralized finance sector. But Bitcoin can have its own native DeFi arena, too, and one new company, Atomic Loans, has just come out of stealth mode to make that arena a reality.

On Tuesday, April 14th, Toronto-based Atomic Loans not only unveiled its Bitcoin-based DeFi lending system but also that the firm just raised $2.45 million USD in a fresh seed funding round.

The proceeds of that round, which was led by Initialized Capital and drew participation from firms like Morgan Creek Digital and ConsenSys Labs, will go toward helping the startup “continue … R&D efforts, work with strategic partners to grow decentralized finance adoption on Bitcoin, and ensure regulatory compliance,” the company said in a press release shared with Blockonomi

Collateralize BTC, Draw Out Stablecoin Loans

The current market capitalization of bitcoin is over $120 billion, which is more than 6 times the size of Ethereum’s present $17 billion market cap. Yet the latter’s DeFi scene, which temporarily reached $1 billion in size earlier this year, has been a huge early success for the second-biggest blockchain project.

With that said, a DeFi scene atop Bitcoin has plenty of runway for its own success with bitcoin’s market cap being as large as it is, but the right solutions will need to be in place first. That’s where Atomic Loans aims to come in.

Indeed, the newly unveiled Atomic Loans protocol will allow users to lock up BTC in a non-custodial escrow system and thereafter draw out automated loans against that BTC, as Ethereum users can currently do through already established dApps like Maker and Compound.

Such loans can be drawn out in the Dai or USDC stablecoins, which will notably give Bitcoiners a straightforward way to spend against their BTC without ever having to sell the underlying BTC. That’s good for holders who want liquidity in the here and now while maintaining exposure to bitcoin’s potential long-term upside.

There are already lending-focused bitcoin services around, of course, but the vast majority of them are significantly centralized in their structures. Atomic Loans will bring a new viable decentralized alternative to the table, Morgan Creek Digital co-founder and partner Anthony Pompliano said:

“There’s a new alternate financial system being built around Bitcoin, with a focus on decentralization. Atomic Loans is building the decentralized financial infrastructure that uses Bitcoin how it was intended.”

Toward a Better Future for Bitcoin

In many ways, DeFi is bigger than just Bitcoin and Ethereum, and as DeFi grows it will likely only continue to power more symbiotic dynamics between the top two public blockchains.

For now, the Bitcoin DeFi scene has no shortage of catching up to do, though progress on this front should continue and Atomic Loans has a chance to seriously help with the catching up, ConsenSys Labs partner Min Teo said:

“Bitcoin will be a core component of DeFi activity, which is growing and expanding rapidly in Ethereum today. The vision of creating a parallel financial system that is permissionless and open to all is one that transcends across chains and communities, and we are proud to continue our support for Atomic Loans who are at the forefront of realizing this vision in a trust-minimized manner.”  

Atomic Loans isn’t a one-stop DeFi solution by itself, to be sure, but it is a notable rising project in the ecosystem that is set to continue maturing. Moreover, its early advance points the way toward other like-minded projects following in its stead, which could in kind lead to a non-trivial Bitcoin-native DeFi sector coming about in the years ahead.



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William M. Peaster is a professional writer and editor who specializes in the Ethereum, Dai, and Bitcoin beats in the cryptoeconomy. He's appeared in Blockonomi, Binance Academy, Bitsonline, and more. He enjoys tracking smart contracts, DAOs, dApps, and the Lightning Network. He's learning Solidity, too! Contact him on Telegram at @wmpeaster

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