BitVault Secures $2 Million Pre-Seed Funding for BTC-Backed Stablecoin

BitVault, a decentralized finance (DeFi) protocol focused on redefining Bitcoin’s role in stablecoin infrastructure, has successfully closed a $2 million pre-seed funding round. The round was led by strategic investors including GSR, Gemini, Auros, and Keyrock, who are joining forces with BitVault to develop what they describe as the “next era of BTC-backed money.” This new form of stablecoin aims to provide an institutionally-aligned alternative to fiat-pegged stablecoins.

The funds raised will support the launch of bvUSD, BitVault’s overcollateralized stablecoin backed by Bitcoin derivatives, and sbvUSD, its yield-bearing variant. The latter is powered by institutional trading strategies developed by GSR. BitVault will operate as a core stablecoin protocol on Katana, a new DeFi-first chain incubated by Polygon Labs and GSR. Katana prioritizes deep liquidity and user rewards, leveraging a licensed fork of Liquity V2 to enable permissioned borrowing, user-set interest rates, and automated liquidation infrastructure.

Michael Kisselgof, Core Contributor of BitVault and VaultCraft, emphasized the protocol’s mission: “Bitcoin was built for moments of fracture. BitVault was built to make it usable. We specifically onboarded GSR, Auros, and Keyrock as strategic investors that can also execute high-yielding, non-directional strategies to create demand and deep liquidity for BTC-backed money.”

BitVault’s entry into the market comes at a time when there is a growing demand for crypto-native stability in a fragmented global monetary environment. Unlike fiat-backed stablecoins such as USDC or algorithmic options like Ethena’s USDe, bvUSD is collateralized by BTC derivatives. This approach mitigates risks associated with overleveraged or anonymous borrowing, as only whitelisted institutional borrowers can mint bvUSD in bulk, while anyone can mint bvUSD using stablecoins. DeFi users can earn yield by staking bvUSD into sbvUSD, which leverages delta-neutral and arbitrage strategies managed by GSR, a globally recognized crypto investment firm specializing in market making, OTC trading, and options.

Alain Kunz, Director from GSR, who participated in the round, commented on the potential of BitVault: “We’re seeing growing interest in BTC-backed stablecoins, especially those designed to integrate seamlessly into DeFi ecosystems. BitVault’s approach with experience in institutional-grade yield strategies positions it well for success. We’re particularly excited about its deployment on Katana, a DeFi-centric chain we helped incubate. BitVault adds to Katana’s evolving ecosystem by introducing a new layer of stablecoin utility, enabling BTC to take on a more productive role within Katana’s high-yield DeFi stack.”

BitVault is a friendly fork of Liquity V2, re-engineered for institutional use under a licensed deployment agreement with Liquity AG. The protocol combines automated, governance-free mechanisms with a permissioned borrowing layer, offering stability while retaining core DeFi primitives like direct redemption and composable yield strategies. Its upcoming VCRAFT token will govern future protocol parameters and serve as a rewards mechanism for stability providers and liquidity contributors.

The launch on Katana positions BitVault at the heart of an emerging liquidity and settlement network across the EVM chain. Initial integrations include Vault infrastructure, Morpho money markets, Sushi AMMs, and a multichain “Bits” points campaign tied to VCRAFT distribution. BitVault is scheduled for mainnet deployment on Katana in June 2025, with broader integrations across DeFi ecosystems and centralized liquidity venues in the works. The team plans to expand its stablecoin suite to support additional BTC-based collateral assets and is actively onboarding institutional borrowers.