Prosperous Bitcoin public chain ecosystem may be the most mainstream narrative in the crypto circle in 2024, and cross-chain transactions and transfers of Bitcoin are among the most popular tracks, with related large financing news following suit.
On January 30th, it was reported that the decentralized exchange (DEX) Portal, based on Bitcoin, raised $34 million in a seed financing round, with participation from Coinbase Ventures, OKX Ventures, Arrington Capital, Gate.io Ventures, and others. The funds will be used for the development of Portal. Portal is a cross-chain atomic exchange protocol that provides decentralized trading and wallet services. Portal plans to launch its products on the mainnet and expand its ecosystem to reduce custody risks.
In fact, as early as September 2021, Portal had completed a $8.5 million financing round, with investors including Coinbase Ventures, OKEx Blockdream Ventures, and Tether co-founder Craic Sellars, among others. The team's early layout in the Bitcoin chain ecosystem is commendable, and this is also attributed to the special experience of its co-founder. Portal's co-founder and CEO Eric Martindale has been involved in Bitcoin for 10 years, serving as the open source director of Blockstream, engineering director of BitPay, advisor to Lemniscap, and the inventor of Fabric.
The two rounds of financing injected $42.5 million in startup capital into Portal, but whether Portal can deliver the most efficient and secure Bitcoin DeFi applications as desired by the industry remains to be seen. The following text will provide a detailed introduction to this project for users.
What are the unique features of Portal's atomic exchange protocol, which claims to have high security and privacy?
Portal is a self-custodial Layer2 wallet and cross-chain DEX built on Bitcoin to achieve atomic swaps between Bitcoin and other crypto assets. Built on Fabric technology, Portal features privacy, high performance, and security. According to the official website, Portal currently has four major business segments: Wallet, DEX, SDK (an interface to help developers build applications), and Rafa (an automated trading program).
The background of Portal's birth is likely familiar to users. Since Ordianls, the trading volume of Bitcoin ciphertext has continuously reached new highs, leading to the emergence of a Bitcoin on-chain trading ecosystem, even directly competing with Ethereum, and building a complete Bitcoin DeFi system. However, the question remains: how can assets on the Bitcoin chain be efficiently exchanged with the Ethereum chain? This has led to a set of strategies: "tokenizing Bitcoin."
In simple terms, tokenizing Bitcoin is to package Bitcoin into another format of assets from a technical and protocol perspective, allowing for 1:1 equivalent value exchange on the Ethereum chain, with representative assets such as WBTC (Wrapped BTC). However, this solution inevitably faces high costs, privacy leaks, and poor liquidity in cross-chain transactions. In response, Portal's self-created atomic exchange protocol, through methods such as aggregating liquidity, building order books, and transferring data to Layer2, has largely alleviated the aforementioned industry challenges, which is likely the reason for the project's substantial financing.
An overview of Portal's key initiatives in ecosystem development, understanding its potential layout for the next steps
In addition to progress in financing, Portal has recently made remarkable progress in ecosystem partnerships. Ordinals NFT market and BRC-20 token exchange LFG have just announced the integration of the Portal DEX protocol into their cross-chain trading system, making cross-chain transactions between Bitcoin and other digital assets fast, secure, and private.
The exchange between Bitcoin on-chain NFTs and BRC-20 assets and mainstream assets has long been plagued by cumbersome processes, back-and-forth switching, poor security, and the need for custody. LFG, as a new exchange in the new track, is unable to solve these difficulties through its own technical system. Currently, LFG only supports BTC payments and transactions, also for the security of user assets. By introducing the cross-chain atomic exchange function of Portal DEX, assets such as ETH, USDT, USDC, and even other Ethereum Layer2 assets can freely circulate in LFG and the entire BTC ecosystem. In response, Portal has stated that it is actively integrating more public chains, wallets, and other on-chain DeFi projects.
So, why can Portal DEX provide such complex cross-chain transaction functionality? This is mainly attributed to the Fabric protocol.
Fabric itself is an open-source protocol for building an anti-censorship layer on Bitcoin, which can be understood as a Layer2 solution for Bitcoin, and Portal is built on Fabric. As a result, Portal inherits many advantages of Fabric, such as anti-censorship, efficiency, trustworthiness, definance, and cross-chain interoperability, while also inheriting the security of Bitcoin Layer1. However, the Portal team has stated that they have made a series of extensions to its functionality based on Fabric, including extending its data computation capabilities, which may be helpful in building game projects on the BTC chain in the future, although this is currently only a plan.
In addition, while announcing the financing news, Portal also claimed that in the coming months, it will launch an AI-driven investment application to help users make intelligent investment decisions using AI technology. Currently, the Portal official has not revealed too much about the details of this AI investment tool, but from the information on the official website, this tool is likely to be an upgrade based on the existing Rafa.
According to the official website, Rafa is an app that helps users automate trading, and its official Twitter account often recommends various new assets to users. The specific return situation is currently unknown.
Risks should not be overlooked: Although the start of 2024 is good, Portal's prospects may not be as bright as expected
In summary, Portal has had an ideal start in 2024, with over $40 million in financing in a bear market environment, far exceeding the industry average, and the Bitcoin on-chain ecosystem it targets still has multiple opportunities. However, the risks facing Portal should not be overlooked.
First, the heat of the ciphertext track has begun to cool, and the red sea effect has begun to show. At the same time, the Ethereum Cancun upgrade is imminent, and under sector rotation, more hot money may shift from the Bitcoin ecosystem to the Ethereum ecosystem.
Second, the overall market situation is far from the conditions at the end of December last year. With the approval of the Bitcoin spot ETF, the industry's negative news has dissipated, and capital outflows will directly affect the later project operations of Portal.
Finally, the most critical progress for Portal in ecosystem development is the deep integration with LFG mentioned earlier, but LFG itself is also a startup project, and its trading volume and user base are not ideal. This raises a more fundamental question: is the exchange of assets on the Bitcoin chain with other public chains a pseudo-demand? Because the Bitcoin ecosystem has not yet given birth to practical applications, and more practitioners also criticize its speculative nature. If it coincides with the cooling trend of the overall market, Portal's targeted sub-market may rarely present excellent opportunities.
In conclusion, we believe that while users participate in the Portal ecosystem and BRC-20 projects, they need to maintain sensitivity to the overall market and sub-sector details, which will help in decision-making.
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