Introduction

Bitcoin inscriptions involve embedding text, images, or audio into satoshis (the smallest Bitcoin unit). A single Bitcoin consists of 100 million satoshis, each with a unique identifier based on ordinal theory. The first Bitcoin inscriptions were NFTs created using the Ordinals protocol. This led to the development of BRC-20 tokens, among other protocols that allow interaction with Bitcoin’s smallest units.

BRC-20 is an experimental token standard developed using Bitcoin’s native Ordinals protocol. Created by Twitter user @domodata on March 8, 2023, it allows for minting and transferring tokens using Ordinal JSON data, though the creator emphasized that these tokens have no inherent value. The first BRC-20 token, ordi, was capped at 21 million tokens, with each minting batch limited to 1,000 tokens. While BRC-20 inherits its name from ERC-20 tokens, the “20” here holds no real significance.

The BRC-20 ecosystem relies on front-end tools to track account balances in real-time, requiring continuous retrieval of blockchain data to log all minting, claiming, and transferring activities. When users mint tokens, the process involves transferring balances from a general account to a receiving account in two steps: first, minting a transfer inscription to the sending address, and second, sending that inscription to the receiving account, after which the front-end system updates the balance.

The Bitcoin ecosystem has caught the attention of many as one of the leading narratives in this bull market. LeverFi, initially focused on on-chain leveraged trading with up to 10x leverage, rebranded from Ramp to LeverFi as it transitioned to the Bitcoin narrative. This article will explore LeverFi’s business evolution, new Bitcoin-related products, and economic models.

What is LeverFi?

LeverFi began as an on-chain leveraged trading platform, previously known as Ramp, allowing users to trade with up to 10x leverage. Traders could deposit collateral into mining protocols to earn rewards while trading with leverage. As a well-established DeFi project, LeverFi began shifting towards the BRC-20 ecosystem late last year, launching OmniZK and the BRC-20 asset issuance platform LeverPro to re-energize its ecosystem.

LeverFi has attracted investments from several well-known firms as a decentralized leveraged trading platform. Co-founder and CEO Lawrence Lim, who started his career in traditional finance in private banking and corporate mergers, later transitioned to crypto via the IOST blockchain network. The team secured $600,000 in seed funding on April 20, 2021, led by NGC Ventures, ArkStream Capital, LD Capital, and AU21 Capital. Later, on September 26, 2023, LeverFi received a $2 million investment from DWF Lab, establishing a partnership for investment and market-making support. These funds are aimed at protocol innovation, marketing, and user acquisition to drive ecosystem growth.

Source: https://www.leverfi.io/#blog

Leveraged Trading with LeverTrade

LeverTrade was the first product introduced by LeverFi, initially known as the Ramp Protocol, before rebranding to LeverFi. Users can deposit collateral to engage in leveraged spot trading with up to 10x leverage. The collateral is redeployed within LeverFi to earn additional yields from other DeFi protocols. The platform’s key components include collateral, lending, trading, and risk management. The risk management module calculates account health, loan-to-value ratios, and other parameters to manage overall risk.

Source: app.leverfi.io

When trading on LeverFi, all open positions are managed within the platform. Users cannot directly access the assets they trade, but they can withdraw the profit if their portfolio has a net profit (Pnl > 0). LeverFi optimizes trading prices by routing transactions through multiple decentralized exchanges (DEXs), allowing users to execute large trades with minimal slippage.

Enhancing BTC Network Performance with OmniZK

OmniZK is a modular zero-knowledge proof protocol introduced by LeverFi to address the scalability and complex computation challenges of the Bitcoin network. The protocol enhances BTC network performance by offloading data to the Ethereum Virtual Machine (EVM) for processing, packaging it using zero-knowledge proofs and sending it back to the Bitcoin network for final settlement. OmniZK supports various cross-chain Bitcoin applications, including non-custodial BTC staking, cross-chain Bitcoin DeFi markets, decentralized asset bridges, and cross-chain liquidity management.

OmniZK operates through service nodes called OmniRelayers, distributed globally, to transmit complex computational data and instructions. The process works as follows:

(1) Upon receiving a data transmission request, OmniRelayer calculates the required amount of BTC, and the user locks the funds in a designated BTC address.

(2) Once confirmed, OmniRelayer begins a security check on the data, synchronizing information using zkOracle, encrypting the service with zero-knowledge proofs, and executing cross-chain operations through Layer0 Endpoints.

(3) After the data reaches the Bitcoin network, zkOracle confirms the transaction, and OmniRelayer signs a Discreet Log Contract (DLC) to transfer the locked BTC to the final address.

Source: docs.leverfi.io

Issuing BTC Assets on LeverPro

In addition to enhancing BTC network performance, LeverFi has launched LeverPro, an asset issuance platform supported by seed funding from DWF. Users stake LEVER tokens to participate in new project launches on the platform. Staking LEVER tokens earn golden tickets (LVR), representing a contribution to the platform and providing early access to Initial Inscription Offerings (IIO) and Initial DEX Offerings (IDO), allowing users to participate in value discovery from the start.

Source: leverfi.io

LeverPro’s golden ticket distribution aims to reward its community members fairly. The top 100 LVR holders, known as LVR VVIPs, receive 100 golden tickets, while those ranked 101 to 300 receive 180 tickets, ensuring a 90% success rate in participation. The remaining tickets are distributed through a lottery system to xLEVER stakers, encouraging long-term investment and ensuring everyone has a chance to participate.

Two projects have been successfully launched on LeverPro: the DeFi protocol Orange Crypto, which manages BTC ecosystem assets, and Flash Protocol, which enables native BTC asset staking, exchange, and lending.

Tokenomics

LEVER is the native token of the LeverFi platform. Following rebranding the initial RAMP token, it was renamed LEVER and distributed to eligible users at a conversion rate of 1 RAMP = 35 LEVER. There will be no further minting or burning of these tokens. This upgrade aims to enhance and expand the platform’s capabilities, providing users with additional financial services.

Source: coingecko.com

The total supply of LEVER tokens is 35 billion. To participate in governance, users must lock their LEVER tokens for 6 to 48 months to receive xLEVER tokens. Each xLEVER represents one governance vote, and users who lock their tokens for longer will receive more xLEVER for the same amount of LEVER.

Beyond governance, LEVER tokens also provide holders various benefits and rewards within the LeverFi ecosystem.

Conclusion

LeverFi has expanded beyond its traditional DeFi offerings as market cycles and trends evolve, venturing into the Bitcoin ecosystem with innovative solutions. The platform seeks to enhance BTC network performance and facilitate asset issuance, aiming to revive market liquidity. However, the underlying challenges of the BTC ecosystem remain unresolved, and the future direction of LeverFi’s development is yet to be determined.