Tim Draper led a $3.5 million seed funding round for Bitcoin lending startup Zest Protocol.
This move is a significant milestone in making decentralized finance (DeFi) accessible on the Bitcoin network, with notable contributions from industry giants like Binance Labs.
$3.5 million invested in Bitcoin lending venture
Built on the Stacks blockchain, the Zest Protocol aims to revolutionize Bitcoin lending. It seeks to allow BTC holders to utilize their assets in an on-chain lending market without the need for intermediaries. The startup is taking advantage of the upcoming upgrades to Stacks Nakamoto and sBTC.
Tycho Onnasch, founder of Zest Protocol, highlighted the limitations of Bitcoin layer 1 technology in supporting basic DeFi operations such as liquidity pools.
“Bitcoin L2 like Stack is set to play a key role in unlocking Bitcoin DeFi. Unlike Ethereum, it is not possible to create basic DeFi primitives such as liquidity pools in Bitcoin L1. The Stacks sBTC upgrade will be a watershed moment for Bitcoin DeFi and is what it was designed for from the beginning,” Onnasch said.
The peg-in-wire format of sBTC on the platform allows users to fund their lending activities through direct Bitcoin transactions. As Zest Protocol prepares to launch sBTC, its infrastructure is already live on the Stacks mainnet and has introduced the first money market for Stacks-based assets.
Zest Protocol originated from Trust Machines, co-founded by Stacks creator Muneeb Ali. He also played a key role in developing the Stacks Nakamoto upgrade.
“I don’t want to hold BTC, I want to use it! We’ve done a lot of experimentation to deploy BTC productively, but it hasn’t been easy. We’re excited to see the Zest Protocol team make this happen and look forward to using the product once BTC deposits open,” said Tim Draper.
Read more: How to Choose a Cryptocurrency Lending Platform
Beyond technology, Binance Labs’ participation signals strong support for Zest’s approach to Bitcoin lending. Current solutions often rely on centralized parties, introducing fees and reducing economic feasibility for users. Zest’s model promises transparency and user control by eliminating unnecessary intermediaries.
This investment is part of a broader resurgence in cryptocurrency lending initiatives, evidenced by recent fundraising activity across the sector. Draper’s continued investment in blockchain demonstrates confidence in Bitcoin-based financial services and the opportunities these market segments can offer, says Mati Greenspan, CEO of Quantum Economics.
“Blockchain-based lending solutions have the potential to be more open and transparent than what is typically found in traditional finance. However, while DeFi is currently still in its infancy, this type of investment can be very risky, especially for those who do not know how to conduct research. For what it’s worth, Tim Draper is a pretty savvy guy and I assume he would have done his homework before proceeding with such an investment,” Greenspan told BeInCrypto.
disclaimer
In compliance with Trust Project guidelines, BeInCrypto is committed to unbiased and transparent reporting. These news articles aim to provide accurate and timely information. However, before making any decisions based on this content, readers are encouraged to check the facts and consult with experts. Our Terms of Use, Privacy Policy and Disclaimer have been updated.