Bitcoin was originally designed as a peer-to-peer electronic cash system. Yet, over the past decade, its primary narrative has remained focused on serving as an inflation-resistant store of value. Despite numerous efforts from the developer community to expand Bitcoin’s capabilities, limitations inherent in Bitcoin’s original design—such as its constrained scripting language, lack of smart contract support, and block size limits—have restricted significant breakthroughs.

Last year, however, the rise of Ordinals ignited unprecedented interest in the Bitcoin ecosystem. This development attracted a surge of developers and investors who saw Bitcoin’s security and decentralization as a foundation for creating a broader infrastructure and functional products, thus unlocking new possibilities for cryptocurrency.

The Velar team seized this emerging trend by focusing on Bitcoin’s robustness while embracing DeFi’s dynamic capabilities. Velar aims to unlock global liquidity for Bitcoin DeFi, facilitating the large-scale adoption of Bitcoin in decentralized finance.

What is Velar?

Velar is a Bitcoin-based DeFi liquidity protocol, currently developing and planning to launch a suite of foundational tools and products. These include a decentralized exchange (DEX), a perpetual contract exchange, a launchpad, and a cross-chain bridge, all aimed at building a comprehensive ecosystem. To enhance its functionality and broaden its user base, Velar collaborates with Bitcoin Layer 2 solutions such as Stacks, Bitlayer, and BOB, integrating their capabilities to expand its reach and compatibility across different platforms.

Source: Velar

The $VELAR token is the native utility token within the Velar ecosystem, playing a key role in governance, staking, fee payments, and accessing various features and benefits across the protocol. With a fixed total supply of 1 billion tokens, $VELAR was listed for trading in early April this year.

The Velar Team Background and Funding

Founded in 2023, Velar is led by its co-founder and CEO, Mithil Thakore, who is also a founding partner of TeraSurge Capital. The founding team brings extensive experience in decentralized finance, smart contract development, and strategic planning.

In early February, Velar completed a $3.5 million funding round, attracting notable investors, including CMS Holdings, Cypher Capital, Trust Machines, MH Ventures, GBV Capital, Mapleblock, Banter Capital, Comma3 Ventures, Cogitent Ventures, Kyros Ventures, PAKA, and Bitcoin Startup Lab. The funding round also featured prominent angel investors such as Alexei Zamyatin, Cem Özer, Michael Chen, Jackson Chan, Ravindra Kumar, and Philip Arthur Moore.

Velar’s Technical Architecture and Ecosystem Development

Velar prioritizes security by anchoring its protocol to the Bitcoin blockchain, leveraging Bitcoin’s proof-of-work (PoW) consensus mechanism to validate transactions and secure the network. Velar collaborates with several Bitcoin Layer 2 (L2) solutions through a multi-chain approach to bring smart contract and DeFi capabilities to the blockchain. This approach preserves the security and decentralization of Bitcoin’s base layer while enhancing compatibility, interoperability, and accessibility within the Velar ecosystem. By integrating familiar tools and programming languages, Velar empowers developers to build complex DeFi applications on Bitcoin, catering to a wide range of users across different networks and driving broader adoption of Bitcoin-based DeFi.

Velar’s roadmap outlines four major development phases:

1. Velar Dharma (v1): Focuses on core products such as the automated market maker (AMM), liquidity pools, liquidity mining, VELAR staking, and an IDO launchpad.
2. Velar Artha (v2): Introduces perpetual swaps, concentrated liquidity, and cross-chain bridging.
3. Velar Kama (v3): Details for this phase will be shared upon the release of Velar Artha.
4. Velar Moksha (v4): Details for this final phase will be revealed upon the release of Velar Kama.

This structured development approach reflects Velar’s commitment to progressively expanding its ecosystem with each phase, facilitating secure and scalable DeFi solutions on Bitcoin.

Currently, Velar has completed its first development phase and is actively progressing through the second phase, with each stage introducing increasingly complex DeFi solutions. According to the team, the Velar Dharma testnet attracted participation from over 150,000 users.

Velar has sequentially launched and built products on Layer 2 solutions such as Stacks, Bitlayer, and BOB throughout this development process. The platform provides a comprehensive SDK and API, enabling developers to build and integrate applications within the Velar ecosystem.

During the Velar Dharma phase, an automated liquidity protocol was introduced. It featured an automated market maker (AMM) inspired by Uniswap V2, which utilized the constant product formula to determine asset pricing within liquidity pools. On the Velar DEX, users can perform token swaps, provide liquidity, and stake assets to earn rewards.

As of now, the Velar DEX supports over 70 Bitcoin ecosystem tokens. According to DeFiLlama, the current total value locked (TVL) on the Velar DEX is approximately $3.66 million.

Source: Velar

According to the Velar Launchpad page, Velar is the first and currently the only project to conduct an IDO on its issuance platform, raising $150,000 in early April at an initial $VELAR token price of $0.03. The team has indicated that any project can apply to conduct a token issuance through Velar’s Launchpad, though a rigorous due diligence review process is required. Users can participate in IDOs by staking $VELAR tokens, with allocations determined by the amount and duration of their stake.

Velar has introduced a cross-chain bridge to facilitate better capital flow and increase token liquidity, designed to connect the Bitcoin and Ethereum ecosystems. Currently, this cross-chain bridge supports $VELAR token transfers between the Ethereum and Stacks networks. In the future, Velar’s bridge will expand to support additional blockchains, including BNBChain, to attract a broader user base.

Source: Velar

In the Artha phase, Velar has focused on seamless integration with Bitcoin Layer 2 (L2) solutions, expanding support for Ethereum Virtual Machine (EVM) and Clarity smart contract language.

Velar has launched the world’s first Bitcoin-based perpetual contract DEX, offering up to 20x leverage. Inspired by the design of GMX, this DEX aggregates liquidity within the Bitcoin L2 ecosystem to minimize price spreads and slippage while providing near-instant transaction settlement for an enhanced user experience.

Source: Velar

The Velar perpetual contract DEX has been deployed across Stacks, BOB, and Bitlayer networks, each contributing unique features and benefits:

• Stacks (Mainnet): Users can use sBTC (Bitcoin on the Stacks network) as collateral to open and maintain perpetual contract positions on Velar.
• BOB (Testnet): By integrating with BOB, Velar Artha combines Bitcoin’s security and liquidity with Ethereum’s EVM smart contract capabilities, creating a robust hybrid Layer 2 ecosystem.
• Bitlayer (Testnet): Utilizing Bitlayer’s Layered Virtual Machine (LVM), Velar Artha seamlessly supports a variety of smart contract execution environments, including EVM and CairoVM, while maintaining stringent security standards.

Through integrations with multiple Bitcoin L2 solutions, Velar aims to enhance liquidity options, optimize capital efficiency, and deliver a smooth trading experience for users.

Velar Tokenomics and Distribution Model

The $VELAR token is the core asset within the Velar ecosystem, with a fixed total supply of 1 billion tokens, scheduled for full release by April 2029. The token distribution breakdown is as follows:

• Community Rewards (35%): Allocated for liquidity mining and other reward programs to encourage community engagement.
• Velar Treasury (20%): Dedicated to funding ongoing development, partnerships, and ecosystem growth initiatives.
• Investors and Advisors (15%): Subject to multiple vesting unlocks to ensure long-term commitment to the project.
• Airdrops and Partnerships (10%): Reserved for airdrops, community incentives, and strategic partnerships to drive adoption and collaboration.
• Founding Team and Core Contributors (20%): Allocated to reward the team and contributors responsible for building and expanding the Velar ecosystem.

Currently, approximately 188 million $VELAR tokens are in circulation, with a market cap of around $66 million.

Holders of $VELAR tokens enjoy several privileges, including the ability to participate in decentralized governance, stake tokens to join IDOs, pay transaction fees within the Velar ecosystem, and access certain exclusive features. These utilities create a robust framework for user engagement and ecosystem support.

Future Development and Challenges for Velar

With the rollout of the Artha phase, Velar has entered a pivotal stage of development. The team remains focused on refining and upgrading its products while expanding external partnerships and building a more active and diverse community.

Currently, Velar’s perpetual contract exchange is in Beta testing, with new features such as a friend referral program and leaderboards set to gradually open up to community users. To engage with and better understand community feedback, the team hosts a monthly “Memes” Spaces event, where they discuss project progress, future plans, and gather user insights.

The Bitcoin ecosystem represents a vast narrative filled with new opportunities, with value and inclusivity that extend far beyond current expectations. The combination of Bitcoin and DeFi can potentially drive innovative financial products and services—such as Bitcoin-based stablecoins, derivatives, and lending markets—further enriching the financial landscape. Velar is actively developing a comprehensive suite of DeFi infrastructure to enhance user experience and drive the adoption of Bitcoin-based decentralized financial services.

However, despite the enormous potential of integrating Bitcoin with DeFi, Velar faces significant challenges, such as the complexity of the underlying technology and regulatory uncertainties. To navigate these, the team must remain vigilant, balancing technological innovation with strategic collaboration within and beyond the ecosystem.

Conclusion

Velar’s vision is to redefine and unlock the limitless potential of combining Bitcoin and DeFi. By anchoring Bitcoin’s secure base layer, Velar aims to provide users with flexible and diverse decentralized financial products and services.

The team systematically develops and refines complementary products, including a DEX, a perpetual contract exchange, and a cross-chain bridge. While these offerings are still in their early stages, they expand the options available to Bitcoin ecosystem users. With the launch of its Launchpad and additional partnerships with Layer 2 solutions, Velar is poised to reach a broader user base and empower more participants in the Bitcoin DeFi space.