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Tim Draper Joins $3.5M Bitcoin Loan Investment
Tim Draper led a $3.5 million seed funding round in Zest Protocol, a Bitcoin lending startup.
This move marks a significant milestone in making finance decentralized (DeFi) accessible to the Bitcoin network, with notable contributions from industry giants such as Binance Labs.
$3.5 million in a Bitcoin lending venture
Based on the Stacks blockchain, Zest Protocol goals to revolutionize Bitcoin lending. It aims to enable BTC holders to use their assets in on-chain lending markets without intermediaries. The startup is taking advantage of the upcoming updates of Stacks Nakamoto and sBTC.
The founder of the Zest protocol, Tycho Onnasch, highlighted the limitations of Bitcoin Level 1 technology in the basic support DeFi operations such as liquidity pools.
“Bitcoin L2s like Stacks are set to play a key role in unlocking Bitcoin DeFi. Unlike Ethereum, creating basic DeFi primitives like liquidity pools is not possible on Bitcoin L1. The Stacks sBTC update is set to be a watershed moment for Bitcoin DeFi, which is what it was designed to do from the beginning,” said Onnasch.
The platform’s use of sBTC’s peg-in-wire format allows users to fund their lending activities through direct Bitcoin transactions. As the Zest protocol prepares for the launch of sBTC, its infrastructure is already operational on the Stacks mainnet, introducing the first money market for Stacks-based assets.
Zest Protocol was incubated at Trust Machines, co-founded by Stacks creator Muneeb Ali. Additionally, he was instrumental in the development of the Nakamoto Stacks update.
“I don’t just want to hold BTC: I want to use it! I performed many experiments to implement BTC productively, but it wasn’t easy. I’m excited to see the Zest Protocol team make it happen and look forward to using the product once BTC deposits open,” said Tim Draper.
To know more: How to choose a cryptocurrency lending platform
Beyond technology, the involvement of Binance Labs it means strong support for Zest’s approach to Bitcoin lending. Current solutions often depend on centralized entities, which introduce tariffs and reduce the economic viability for users. Zest’s model promises transparency and user control, eliminating unnecessary intermediaries.
This investment is part of a broader resurgence in crypto lending initiatives, highlighted by recent financing activity across the industry. Draper’s continued investment in blockchain shows confidence in Bitcoin-based financial services and Mati Greenspan, CEO of Quantum Economics, in the opportunity such a market sector can offer.
“Blockchain-based lending solutions have the potential to be more open and transparent than those typically found in traditional finance. However, at this time, while DeFi is still in transition, these types of investments can be extremely risky, especially for those who don’t know how to do the research. For what it’s worth, Tim Draper is a pretty savvy guy and I assume he probably did his homework before moving forward with such an investment,” Greenspan told BeInCrypto.
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