Interlay Raises $6.5M Towards Tokenized Bitcoin on Polkadot

A cross-chain interoperability project built on Polkadot, Interlay has announced that it raised $6.5 million in new funding. The new funding will go towards introducing tokenized Bitcoin on Polkadot, and the project is also aiming to expand its offerings to other Layer 1 blockchains. 

The round was led by DFG with participation from IOSG, KR1, Hypersphere, Nexo Finance, D1 Ventures, and Signum Capital. Back in July 2021, the company closed a $3 million seed funding round.

Interlay’s Purpose

Interlay enables users to lock Bitcoin on a decentralized network of collateralized vaults connecting Bitcoin and Polkadot. Following this, they can mint a Bitcoin-pegged token called interBTC, which can be used in the Polkadot ecosystem. interBTC can also be used as collateral for DeFi lending.

interBTC is the company’s principal product, and it is a fully crypto-based Bitcoin-backed asset backed by multiple collaterals. It functions like an algorithmic stablecoin and can be redeemed for Bitcoin.

The initial funding for the project was provided by the Web3 Foundation, with the aim of growing the DeFi ecosystem by utilizing Bitcoin’s liquidity. The company plans to double its workforce over the next eight months. It currently has 15 full-time employees and over 100 community ambassadors. 

According to DFG founder and CEO James Wo, the team was “very proud to be an early supporter of Interlay.”

While other tokenized Bitcoin protocols focus on solutions like centralized bridge contracts, the interBTC is fully non-custodial. A decentralized protocol termed XCLAIM was developed by the interBTC founders, and it can lock, issue, and redeem Bitcoin. It is supported by non-custodial collateral vaults, which help maintain the physical backing of interBTC.

Alexei Zamyatin is Interlay’s co-founder and CEO.

“Bitcoin DeFi so far relies on centralized providers,” and interBTC offers a “trustless and decentralized alternative.”

Launching a Parachain

According to the Interlay team, it is now looking to launch a parachain. It will participate in Polkadot’s second round of parachain slot auctions set to take place on December 23, 2021. If the company secures a parachain, it will work to integrate interBTC with DeFi projects that already have parachains, such as Moonbeam. The company will then look to launch on other networks like Ethereum and Solana.