Satoshi Protocol
Satoshi Protocol project overview
BTC was originally designed as a decentralized and secure payment system. However, as the industry grew in popularity and matured, the first cryptocurrency faced serious limitations in scaling and the ability to develop new use cases for the blockchain, which cannot cope with the load during periods of peak activity. This leads to increased fees and significant delays in transaction processing. In response to this, the concept of layer 2 networks for BTC arose.
These protocols are built on top of the main blockchain, they are designed to expand its capabilities and improve network performance. L2 solutions provide increased scalability, the potential to support decentralized applications and the development and expansion of the BTC ecosystem.
L2 networks are currently developing actively. One of the projects with the flagship L2 blockchain for the Bitcoin network is BEVM (Allocation 04/26/2024).
An entire ecosystem is being developed on the basis of this L2 network: the first BEVM project is Satoshi Protocol.
The idea of the Satoshi Protocol project is to create a decentralized financial system based on BTC, allowing users to generate a stablecoin called $SAT, pegged to the US dollar, using BTC as collateral.
The project aims to strengthen BTC's position in the DeFi ecosystem and provide a stable alternative to fiat stablecoins, increasing its accessibility and functionality as a means of payment.
The Satoshi Protocol aims to become the infrastructure foundation for DeFi on the Bitcoin network and make $BTC truly suitable for everyday use by offering a stablecoin in the form of a CDP model.
CDP-model
CDP, or “collateralized debt position,” is a key element in decentralized finance (DeFi) ecosystems that allows users to generate stablecoins using cryptocurrency as collateral. Satoshi Protocol uses a CDP to create the $SAT stablecoin, which is pegged to USD.
Users place BTC as collateral in a specially created position (CDP). This allows them to borrow the $SAT stablecoin in proportion to the value of the collateral provided, with the minimum collateral ratio requirement typically being around 110% of the loan amount. If the value of the collateral falls below the value of the loan issued, then the collateral can be liquidated to cover the debt.
The CDP process allows cryptocurrency holders to gain liquidity without having to sell their assets, thereby supporting their long-term investment interest. It will now be possible to borrow a stablecoin against $BTC and all DeFi applications on the network will be able to use this opportunity. It will also be possible to then take out an instant loan in other assets using the $SAT token.
How the $SAT stablecoin works
The working mechanism of $SAT consists of an overcollateralization mechanism, a liquidation mechanism and an arbitrage mechanism which are also common features of most stablecoin protocols in the DeFi space. However, such functions are implemented in the BEVM ecosystem for the first time:
Users must maintain a collateralization ratio greater than 110% when opening a position to avoid liquidation. In other words, when borrowing $100$SAT, users must lock up more than 110% of the borrowed amount as collateral, for a total of $110$SAT worth of $BTC.
The price of $BTC will fluctuate depending on market movements. If the value of the collateral decreases due to a fall in the price of $BTC, causing the collateral ratio to fall below 110%, the liquidation mechanism will be activated. The protocol will use SAT from the stabilization pool to purchase liquidated collateral at a discount to pay off the borrower's debt.
It is the most important mechanism for ensuring liquidity and stability in the Satoshi Protocol. Users who deposit $SAT into the stabilization pool provide corresponding liquidity. If any user's collateral ratio falls below 110%, resulting in liquidation, then the process of selling BTC collateral at a discount to receive $SAT is funded from the stabilization pool.
Users providing $SAT liquidity in the stabilization pool can purchase liquidated $BTC collateral at a discount. The protocol then uses the $SAT received from the liquidated collateral to pay off the debt, ensuring that the protocol is always overcollateralized.
3. Exchange and redemption of $SAT
When the price of a stablecoin drops below 1USD, arbitrageurs can buy $SAT at the market price and use the redemption mechanism to exchange the purchased $SAT for 1USD worth of BTC assets at any time and sell them for arbitrage. This arbitrage strategy takes effect when the price of $SAT falls below 1USD, which increases the demand for $SAT and brings its price back to 1USD.
When the price of $SAT rises above $1.1, arbitrageurs can pledge $BTC to Satoshi Protocol to lend $SAT, thereby selling the stablecoin into the market for a profit, creating corresponding selling pressure and adjusting the price below $1.1. All users can mint $SAT by depositing $BTC as collateral and paying a fixed annual interest rate of 4.5%.
Protocol revenue structure
- Loan Fee: One-time issue fee of 0.5%. Fixed annual interest rate of 4.5%.
- Redemption Fee: A fee of 0.5% to 5% is charged for redeeming $SAT for BTC.
- Flash Loan Fee: The protocol offers a flash loan service for the $SAT token with a fee of 0.09%.
- Liquidation Fee: A fee of 0.5% on collateral is charged at the time of liquidations.
Satoshi Protocol is building infrastructure for DeFi applications on the L2 BTC network by issuing the USD-pegged stablecoin $SAT. This is an analogue of the famous Maker DAO project, created on the Ethereum blockchain and its stablecoin DAI, only for the BTC network.
Протокол функционирует, успешно запущена основная сеть (mainnet).
Team
The main team (15 people) is from Taiwan.
- Naka: business development, promotion.
Responsible for fundraising and business development, has many years of entrepreneurial experience creating products on Solana, Sui and EVM blockchains. - YQ Huang: Lead developer of the protocol.
5 years of experience developing Web3, including NFTs and DeFi, and teaching smart contracts in many training courses. Knowledge of the DeFi protocol, experience in DeFi and DApp development. - Jasmine: Leading smart contract developer and security auditor.
4 years of experience in developing smart contracts and security audits in the Quant cryptocurrency trading team, experience in developing MoveVM and EVM virtual machines. Calculation of many zero-day vulnerabilities and rewards for this from projects. She took several prizes in web3 hackathons as a developer. - Hugo: Operations Director, Marketing Director.
6 years of experience in the crypto industry. Previously, he was responsible for marketing, development of projects on the tier-1 exchange and product development for many DeFi projects. Responsible for marketing and operational processes at Satoshi Protocol.
The team is close-knit, has been working for a long time, and is a regular participant in crypto conferences and panel discussions on the BTC ecosystem. Recognizable in the BTC community.
Investors
The lead investor of the Pre-seed round was Waterdrip Capital, a fairly well-known Chinese venture fund founded in 2017, specializing in the crypto industry, investing in more than 150 blockchain projects, and actively supporting the development of the Bitcoin ecosystem. An influential fund with extensive media connections in Southeast Asia will help the project enter the market of this region and receive attention from Cointelegraph Chinese, Bitwires, Lichang and other popular media resources in China. The fund has a solid portfolio and has invested in Polkadot, Cosmos, Filecoin, TheGraph, Casper, Raydium and others.
L2 Bitcoin represents a completely new promising direction. Given the influx of large capital from traditional finance following the approval of the Bitcoin ETF and the announcement of the halving, we are optimistic about the potential of the L2 Bitcoin ecosystem. Satoshi Protocol has a great chance of becoming an important part of BTC DeFi. — Waterdrip Capital
Invested in Satoshi Protocol and its parent project, BEVM blockchain
Satoshi Protocol's stablecoin is likely to become the largest native project in the Bitcoin ecosystem. In the future, the Bitcoin blockchain and its other L2 solutions will use the $SAT stablecoin as the cornerstone of BTCFi. — BEVM Foundation
The leading investor in the Seed round will be the large investment fund CMS Holdings.
CMS Holdings is a venture capital fund focused on investing in Web3. Founded in 2019, CMS Holdings immediately began actively investing in projects related to blockchain and cryptocurrencies, quickly gaining momentum. A large team of experienced professionals constantly monitors new trends and projects to identify the most promising investment opportunities. The Foundation actively collaborates with developers and project teams to assess their potential and help them implement them. The company's portfolio includes such well-known projects as the Chainlink oracle, the dYdX exchange, Solana, Polkadot, Avalanche, and Injective blockchains.
Token utility
In addition to the $SAT token, the project also has its own $OSHI token.
$OSHI is involved in the economics of the protocol and allows users to earn fees & participate in the governance of the protocol through staking.
Basic operations include borrowing $SAT against $BTC, investing $SAT in a stabilization pool to earn rewards, and staking $OSHI to receive a share of the protocol's revenues. These mechanisms contribute to the price stability of $SAT and maintaining its peg to USD, ensuring the functionality and reliability of a stablecoin in the DeFi ecosystem.
Tokenomics
- Our round: Seed (round valuation $30 million.)
- Token price: $0.30
- Conditions: 0% on TGE, 3 months cliff, 10% unlock, another cliff for 3 months and then linear unlock for 2 years.
- TGE: scheduled for July 2024.
Bypassing launchpads, the project is preparing to immediately launch on large centralized exchanges, such as ByBit, OKX, KuCoin and possibly Binance, using the popular launchpool mechanism of these exchanges (OKX Jumpstart, Binance Launchpool, KuCoin Spotlight, ByBit Launchpool).
The market maker of the project will be one of the early investors, the market maker fund Web3Port.
Social networks, links
The popularity of the project is developing dynamically: 90k users on Twitter/X, more than 40k on Discord and Telegram.
🌐 Website: https://satoshiprotocol.org/
📁 Documents: https://docs.satoshiprotocol.org/
🐦 Twitter/X: https://www.twitter.com/SatoshiBEVM
💻 Discord: https://discord.com/invite/vQdzbcB7mS
💻 Telegram: https://t.me/satoshi_sat
💻 Medium: https://medium.com/@satoshi-protocol
An interesting project in the most popular direction L2 Bitcoin. Potentially important infrastructure project for all DeFi applications on BTC. Strong investors, great support from the main BEVM blockchain. High level of project readiness, mainnet has been launched. More than 100K addresses are registered in the protocol, a developed community, a popular media project that will be released in the summer of 2024 immediately on large centralized exchanges. We definitely recommend adding this potentially promising project to your crypto portfolio.