Exploring Bitcoin DeFi With BITLiquidity CEO Simo Vukmirica

The emergence of BRC-20 tokens has indubitably unlocked a new era of development within the Bitcoin ecosystem, signaling a potential shift in the capabilities of Bitcoin's original base layer.

Bitcoin DeFi offers a promising start as the prospect for a Bitcoin-powered DeFi and tokenization continues to grow. However, can a Bitcoin DeFi surpass the limitations and shortcomings of Ethereum-powered DeFi?

In a quest to answer this question, BITLiquidity CEO provided valuable insights into the emerging frontiers in the Bitcoin ecosystem in this interview with Olayimika Oyebanji.

Simo, can you briefly tell us about your journey to web3?

In 2016 I first entered the crypto space, purchasing my first ever token Antshare (now known as NEO) and within a few days the token had increased more than 100% and kept climbing. I was hooked and from then on I devoted my waking hours to learning more about crypto.

In 2017 I started mining Ethereum with a 100 rig mining farm and also began to focussed predominantly on ICOs between 2017-2019. Following the ICO craze and realising that the space was getting tougher to be in a position to access promising projects, this lead to my KOL journey and crypto becoming my full time focus from 2019 onwards and led to access to premium projects.

As a KOL, I founded a Venture Capital firm which has now invested over $9,000,000 in startups and I continue to support projects through investment, marketing and Advisory positions.

Bitcoin is sound money with strong fundamentals. What's driving the push for additional functionalities?

Bitcoin has always been known as the first digital currency with its sole use for worldwide money transfers. As time went on Bitcoin was seen as a store of value for investors, and despite Ethereum’s expansive ecosystem, Bitcoin has stood firm as the leader of crypto, but has always lacked functionality.

As we have seen from other L1s, there is demand and with the right support the ecosystem can flourish, as Bitcoin maxis are a strong community that has been asking for Bitcoin DeFi options for a long time, and with the introduction of BRC20 and ordinals this finally has become a possibility.

How do BRC-20 tokens differ from Ethereum’s ERC-20 tokens?

BRC-20 and ERC-20 are distinct token standards used on different blockchains. BRC-20 functions on the Bitcoin blockchain, whereas ERC-20  functions on the Ethereum blockchain.

The development processes for ERC-20 and BRC-20 tokens are notably different. ERC-20 tokens are created using smart contracts on the Ethereum network. While BRC-20 adopts a unique method, leveraging Bitcoin's existing UTXO model. Instead of employing a smart contract, token information is embedded directly into satoshis, the smallest units of Bitcoin.

Can you take us through some of the use cases for Bitcoin DeFi as an emerging reality?

If you experienced the EVM DeFi early days of 2017, you would know that this was the beginning of one of the leading narratives that helped to propel Ethereum and grow its ecosystem.

Now that Bitcoin DeFi is emerging, we can learn, adopt and improve from EVM DeFi and bring this to bitcoin’s secure chain, opening up new opportunities such as DEXs, Marketplaces, borrowing and lending platforms, derivatives options, DAOs, Stablecoins and more.

Security is one of the major challenges facing DeFi.  Why do you think a Bitcoin DeFi can navigate this problem?

Bitcoin DeFi can navigate security challenges more effectively due to the proven security and stability of the Bitcoin network. Bitcoin has the longest operational track record without major security breaches, secured by an immense amount of computational power through its proof-of-work consensus mechanism.

The Bitcoin scripting language is designed to minimize attack surfaces, and projects like RSK aim to extend smart contract functionality while maintaining Bitcoin's security principles.

What can you tell us about the founding of BITLiquidity?

After working on various projects in the past, being involved and seeing the EVM DeFi explosion in 2018, and being involved in the BRC20 space, I could see that DeFi on BTC has the potential to be the next major narrative as it is still in its growth, development and expansion phase and with many L2’s, DEXs and marketplaces emerging there was one major thing lacking, and that is a Liquidity Aggregator for the bitcoin ecosystem.

Having being involved in the crypto space since 2016, I reached out to a few contacts and close friends who have been in the space since 2011 to discuss the potential and put together our team and in November 2023 BITLiquidity was founded with myself, Dusan Djuki as our CTO, Aleksandar Gajic as our CSO, Mihai Radu as our CBDO and Ismael El Atassi as PR Head.

BITLiquidity was initially bootstrapped, and we onboarded a leading incubator, FourLeaf Network to support BITLiquidity as what we are building is a first for the ecosystem. Doing so FourLeaf helped us to onboard some leading advisors in the crypto space including Amalia Grochal from Ordinals Council and Mira Dao and Calvin Ferreira from Bitlayer.

Liquidity fragmentation is considered a stumbling block to Bitcoin DeFi. What can be done to address it?

We are pioneering in the BTC space with BITLiquidity and have faced many hurdles one of the biggest challenge we faced was the Liquidity fragmentation on Layer 1 DEXs and Marketplaces, to solve this we aggregate off chain through CEXs using our custom built API Keys, doing so we have partnered with all the leading exchanges which will provide our users to best experience and trading solutions.

How does BITLiquidity interact with L1 and L2 protocols?

BITL engine directly interacts with Bitcoin L1 leveraging partially signed Bitcoin transactions and discreet log contracts, as well as scans across already CEX-listed pairs, in order to establish the best price(CEXes hold BRC20 tokens on BTC L1 addresses). On BTC L2s, we work with the existing environment of the protocol, where in most cases these are EVM-based. If desired token has better pricing, we can interact with the layer and deliver the tokens to users in native or L2 format.

Can you share a success story with us?

It has been a tough journey but we are excited to announce we are now in the process of internal alpha testing of our product along with our smart contracts being audited.

We will shortly announce our BETA test campaign with Bitlayer, one of the leading BTC Layer 2s. This is a huge achievement for us as our MVP is ready well before our TGE, and we want users to be able to interact and be involved in this emerging DeFi space.

I can’t disclose all information but I am happy to inform you that Bitlayer is one of key partners, which are involved in the BETA Campaign. So, we would like encourage everyone to follow our socials and be involved as you will not want to miss our lined-up campaigns.