Sovryn: Permissionless Bitcoin Lending, Borrowing, and Margin Trading 

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Arguably one of the best use cases for Bitcoin as the leading cryptocurrency is a store of value. In other words – an asset that doesn’t depreciate in value over time but rather does the opposite.

This is a heavily debated topic in the past couple of years, and it became especially pressing in 2020 due to the actions taken against the global coronavirus pandemic. The US Government printed trillions of dollars in an attempt to assist the struggling economy which, in turn, weakens the dollar as a primary reserve currency.

This has led many institutional investors to turn to Bitcoin as an “inflation trade.” In other words, they’d purchase BTC in order to protect their money against inflating fiat currencies.

This, however, seemingly limits one’s opportunities to simply buying and holding BTC, which doesn’t necessarily have to be the case.

Platforms like Sovryn offer a solution to BTC hodlers who want to put their coins to good use and increase their stack through additional capabilities such as lending, for instance. Sovryn also offers bitcoin margin trading and borrowing, so let’s dive a bit deeper and take a look at what the platform has to offer.

What is Sovryn?

Sovryn is described as a non-custodial, permissionless Bitcoin lending, borrowing, and margin trading system based on smart contracts. In other words, treaders keep the custody of their own bitcoins, meaning no central authority gets to safeguard their keys. This goes in line with the rule “your keys, your bitcoins.”

At the time of this writing, the platform offers a few features, which include:

• Lending pool – users are able to earn interest by lending their tokens to borrowers and margin traders.
• Margin trading – users can create long and short trades with a leverage of up to 5x as they are allowed to borrow it from the lending pool.
• Spot exchange – the platform is an automated market maker (AMM) that allows instant trades between different tokens at a low cost and with low slippage.
• Fast BTC relay – users can instantly take advantage of their bitcoins with smart contracts and other decentralized products using any BTC wallet.

The team has also made it clear that they plan on adding new features in the future. For instance, over the next few months, Sovryn promises to enable its users to borrow tokens from the lending pool, with the lending being over-collateralized.

Potential Use Cases for Sovryn

To make the above more visual, let’s go through a simple example of how someone can take advantage of the Sovryn platform.

Imagine a user hodling one bitcoin and they want to increase this amount, but they don’t know how to trade and don’t want to engage in other risky ventures. Moreover, the user also doesn’t want to move their BTC to a centralized service, hence giving up control over his private keys.

Through Sovryn, the user can issue a peer-to-peer (P2P) loan from their wallet, earning interest on their holdings while another user is able to borrow it and trade, for example.

Are the Smart Contracts of Sovryn Safe?

One thing that has to be considered when working with a smart contract-based platform is the architecture and the security of the smart contracts themselves since they inherently have a non-zero chance of failure.

The smart contracts of the Sovryn protocol are periodically assessed by security auditors working independently. The last audit was carried out on October 7th and can be seen here.

All in all, the platform seems like a reliable non-custodial protocol where users can engage in various activities without having to trust a central authority and give up control over their private keys.