About
From DeFi Summer to a New Season of Sustainable Bitcoin-backed Lending
Coinlateral is a Bitcoin Fintech startup on a mission to become the go-to reference for approaching and navigating the Bitcoin-backed lending market, spanning both CeFi and DeFi—Bitcoin DeFi.
The concept began during the DeFi Summer of 2020, when a growing number of applications made it possible to use BTC as collateral for permissionless, collateralized loans.
During the bull market, liquidity surged in the crypto market, fueled by pandemic-era QE, driving risk appetite and greed among not only retail investors but also institutional players and service providers.
Many DeFi protocols and crypto lending companies soon revealed their unsustainability, culminating in the collapse of well-known platforms like BlockFi, Celsius, and others, swept away by a domino effect.
The absence of bailouts and the power of a still largely free market allowed for rapid learning from these failures. Not everyone drew the same lessons, and many builders and investors exited the market.
One key lesson that shaped Coinlateral’s development is that the root of mismanagement in CeFi companies and flawed design choices in DeFi stemmed from a drift away from Bitcoin—both as a chain and as a set of foundational principles.
Rehypothecation and commingling of client collateral for reinvestment, exposure to tokens and crypto hedge funds like Alameda on the CeFi side, opaque counterparty risks, wrapped BTC, and bridge security vulnerabilities that materialized in some DeFi cases, form the knowledge base on which new, Bitcoin-focused players are rebuilding applications and reputation in the Bitcoin-backed lending industry.
Coinlateral joins these players, aiming to contribute to an ecosystem built on Bitcoin as both a technological infrastructure and a monetary system, with a specific focus on BTC as collateral.
From Multi-chain to Multi-layer Financial Applications
The decision to focus exclusively on the Bitcoin ecosystem isn’t driven by a presumption that other chains won’t develop sustainable, value-generating applications, but by a pragmatic startup approach paired with a long-term vision.
The pragmatic approach involves concentrating resources to offer services—and eventually applications—on a chain whose foundational principles lead its builder community to adopt a conservative and sustainable design approach.
At the same time, rapid evolution and experimentation on Bitcoin’s layer 2s and sidechains make the creation of promising financial applications to leverage and realize Bitcoin’s various properties.
The longer-term vision is that building services for and on Bitcoin is the best lasting security design choice.
A multi-chain decentralized finance system, consisting of multiple layer 1 chains optimized for different properties, comes with a persistent infrastructural problem: the cryptographic security of bridges between chains, which introduces issues like timing problems, forgeries, and pricing oracles.
On top of this technological architecture challenge, there’s the sustainability issue of tokenomics for gas coins, utility tokens, and governance tokens. Those who experienced DeFi Summer will recall how the “fixed” 20% yield on stablecoins from Anchor Protocol on Terra Luna seemed too good to be real.
Are multi-chain DeFi issues an acceptable trade-off for building and using programmable finance not possible on Bitcoin?
No, they are not necessary trade-offs.
In a layered finance, the base layer can solely provide settlement, with no need for additional on-chain functionality like smart contracts that might compromise security or decentralization.
In a layered financial system where the base layer serves as a settlement layer, why not use the most decentralized and secure chain, backed by PoW—the only consensus mechanism that ties a monetary system, before a financial one, to commodity money as the only alternative to fiat money?
Is it too late because a multi-chain ecosystem has already been established and will become the standard approach?
The market will deliver its verdict, but as builders, it’s not too late to make the best possible choice for the long run.
Team & Contact
Coinlateral started up in Switzerland, involving a remote international team.
For information, partnerships and collaborations, text to:
Email: team@coinlateral.finance
Meet the team in person by scheduling a meeting at:
- Startup Space Zürich
Wiesenstrasse 10A, 8952 Schlieren - PoW.space Lugano
Contrada di Sassello 10, 6900 Lugano
