What is Sovryn, And Why Should You Care?

Note: I invest in Bitcoin for 3 three years and just HODLING it. Now, I got interested little in the ALT world with around 2,5% of the portfolio (I’m prepared to lose it, just want to explore the space a bit). This project interested me. But I’m not a developer, trader, or altcoin OG. In reality I’m an alt-coin fish and you should keep this in mind while reading this article. This is not investment advice.

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!Note I invest in Bitcoin for 3 three years and just HODLING it. Now, I got interested little in the ALT world with around 2,5% of the portfolio (I’m prepared to lose it, just want to explore the space a bit). This project interested me. But I’m not a developer, trader, or altcoin OG. In reality I’m an alt-coin fish and you should keep this in mind while reading this article. This is not investment advice.

What is Sovryn?

Sovryn is a single purpose project: To become an open-source operating system for the finance of the future.

A pretty ambitious goal, right? Well, let’s break it down a bit.

But first you can check the Sovryn intro video:

Sovryn wants to bring the DeFi to Bitcoin.

DeFi or decentralized finance refers to the effort to build a decentralized version of classically centralized financial institutions like Banks, Exchanges, and Loan providers.

It utilizes the Bitcoin 2nd layer, and it could provide the possibility to build the DeFi infrastructure above the Bitcoin. Ethereum is the main DeFi hub with projects like Uniswap, MakerDAO, Compound, BlockFI, and others.

Sovryn wants to take that position from Ethereum and build the whole structure on Bitcoin.

Why do we need Bitcoin DeFi when we already got the Ethereum one?

There are a couple of reasons. In my amateurish opinion those four are the most sound:

  1. Ethereum has problems. Whether it’s scalability, high fees, or an enormous challenge linked to migrating into the Ethereum 2.0. Some think Ethereum will be able to solve this problems, many don’t. The truth is, that Ethereum doesn’t work as the “global computer” right now.

  2. Decentralization is the killer feature of Bitcoin. Yet, if you use it just on somehow centralized platforms (because you have to) you get rid of most of the benefits. Having the DeFi infrastructure on Bitcoin would allow you to use it and keep all of it major benefits (like your keys –> your coins).

  3. DeFi cannot be ignored. It solves meaningful problems, and it seems that people are interested in using it. If Bitcoin allows building the DeFi infrastructure on its 2nd layer it should be there. There’s no point why to give the market share and power to other projects when we can use Bitcoin with 11 years of Lindy effect for it.

  4. The world of finance still waits for the permissionless disruption. Hotels were disrupted with Airbnb, Taxis with Uber, and car sellers with shared car services. Yet in the world of finance, we still live in the world, where the banks are “too big to fail”, and we as normal people pay for this privilege handsomely. And it gets worse things like central digital currency or abandonment of physical cash may be closer than we think. DeFi could be the way of how to fight this monopol.

How does the Sovryn works?

Sovryn is built on Bitcoin layer two, the Rootstock (RSK) sidechain. Layer two tries to solve the problems with limited transaction speed, high fees, and possible slower speed of transactions on layer 1. The lighting network is a great example of sound use of layer 2.

As far as I understand the narrative:

Layer 1 = Bitcoin as a store of value (digital gold)

Layer(s) 2 = Bitcoin as money

Because it’s on layer 2 the Sovryn is “merged mined” with the Bitcoin on layer one. That provides it with the most important Bitcoin features like decentralization, inability to being shut down, and security (it has the same hash rate).

Despite it should be secure, it’s important to say, that once you used the Sovryn platform, the Bitcoin gets locked on the main blockchain, and the transactions are made above it, so it’s less secure than layer one.

Let’s sum it up a bit.

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Benefits of Sovryn:

  • A promising way of how to bring the DeFi (trading, landing, etc.) and Smart Contracts directly to the Bitcoin blockchain.
  • It already works.
  • With Ethereum you can have Wrapped Bitcoin in the Smart Contracts. But in reality, you use DeFi services but not the DeFi “system”, as you have to still believe the ERC-20 WBTC token.
  • Merged mining with Bitcoin
  • No KYC —> and even a technical impossibility (as far as I understand) to bring it there.
  • To paraphrase Anthony Pompliano: “Decentralized version of anything can be much bigger than the centralized.”
  • —> In other words, the network effect can be enormous, same with Bitcoin.

Downsides (potential problems with Sovryn)

  • It’s still a very young concept/technology so no Lindy effect that it would back up.
  • It’s not easy to get fiat money directly on the decentralized exchange (or back from it) as you don’t want to trust any 3rd party who would convert it.

Decentralization is the double edge sword.

  1. It doesn’t seem that the SOV token would be tradable on classic exchanges like Binance which may slow down the adoption.
  2. Sovryn cannot have a fractional reserve. If a well-known institution comes to a centralized platform, it may say: we got credit, we got reputation –> so lend us BTC, and we will pay it back later with interest. This isn’t possible in the decentralized world. And the absence of fractional reserves also means lower interest rates for investors (as far as I understand).
  3. As the rapid increase in the use of the Binance chain clearly proved: People don’t care about the decentralization nearly as much, as they say… And the price for a decentralized version may be too high to pay.

How can you try Sovryn or invest in it?

Sovryn project has a token (SOV), which isn’t the altcoin. The SOV token should coordinate the efforts of large numbers of people by having the ability to vote on the system and earn the revenues on the system (e.g. the exchange fees).

So as one of the founders Edan Yago says:

“It’s like decentralized equity in a way the difference is that you have to be an active participant to earn revenue). And your quote on the stem is not protected by any law/anyone anywhere.”

You can invest in Sovryn either by directly buying the SOV tokens on the Sovryn page, or you can provide the dollar of BTC liquidity to the exchange, and get the tokens/interest in return.

!My experience of buying it:

It’s ok just be patient. I used the fast BTC and MetaMask wallet, and instead of 15 minutes, it took about 1 hour. Be prepared for this. If anything, the official Discord is a great place where to look for help.

Both can be done here: https://www.sovryn.app/.

Hope you enjoy the article, and stay Sovryn!

P.S. I’m a truly crypto fish. I’m an enthusiast, but I don’t understand the technology deeply, so keep this in mind. And if you have any suggestions or information corrections, definitely let me know!

Sources:

Discord: https://discord.gg/EPXQrxzu

Interview with Yoda: https://www.youtube.com/watch?v=w54FjzB9bAw

Sovryn wiki: https://wiki.sovryn.app/en/home

Sovryn web: https://live.sovryn.app/

Sovryn Manifesto: https://sovryn-website.pages.dev/blog/sovereign-bitcoiners-manifesto

Sovryn price:

https://coins.green/

https://sovprice.tiiny.site/

What do you think about Sovryn?

Let me know in comments

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