BitVault Secures $2M for Bitcoin-Backed Stablecoin on Katana Chain

BitVault has secured a $2 million investment to develop a Bitcoin-backed stablecoin called bvUSD, which will launch on the Katana chain. The stablecoin aims to unlock Bitcoin's liquidity for the DeFi ecosystem, enabling yield generation with staked bvUSD and supported by crypto arbitrage strategies. BitVault is a fork of Liquity V2 and features a permissioned borrowing layer, combined with core DeFi features.

BitVault has secured a $2 million investment to develop a Bitcoin-backed stablecoin called bvUSD, which is set to launch on the Katana chain. The stablecoin aims to unlock Bitcoin's liquidity for the DeFi ecosystem, enabling yield generation with staked bvUSD and supported by crypto arbitrage strategies. BitVault is a fork of Liquity V2 and features a permissioned borrowing layer, combined with core DeFi features.

The funding round was led by strategic investors including GSR, Gemini, Auros, and Keyrock. The funds will support the launch of bvUSD, an overcollateralized stablecoin backed by Bitcoin derivatives, and sbvUSD, a yield-bearing variant powered by institutional trading strategies from GSR.

BitVault aims to redefine Bitcoin’s role in stablecoin infrastructure by providing an institutionally-aligned alternative to fiat-pegged stablecoins. The protocol will serve 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 to make Bitcoin usable in moments of financial fracture. The strategic investors, including GSR, Auros, and Keyrock, are expected to execute high-yielding, non-directional strategies to create demand and deep liquidity for BTC-backed money.

BitVault’s stablecoins are designed to address the rising demand for crypto-native stability in a fragmented global monetary environment. Unlike fiat-backed stablecoins or algorithmic options, bvUSD is collateralized by BTC derivatives. Only whitelisted institutional borrowers can mint bvUSD in bulk, while anyone can mint bvUSD using stablecoins, mitigating risks associated with overleveraged or anonymous borrowing. DeFi users can earn yield by staking bvUSD into sbvUSD, which leverages delta-neutral and arbitrage strategies managed by GSR.

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.

BitVault is designed to offer a crypto-native solution for money through its BTC-backed stablecoin, bvUSD, and a yield-bearing staked stablecoin, sbvUSD. The protocol aims to provide an institutional-grade, capital-efficient stablecoin with user-set interest rates, multi-collateral backing, and enhanced liquidity mechanisms.

The introduction of bvUSD represents a significant advancement in integrating Bitcoin more deeply into the DeFi landscape. By providing a stable, BTC-backed medium of exchange, bvUSD enables Bitcoin holders to unlock liquidity without relinquishing their BTC holdings. This stablecoin facilitates more predictable lending and borrowing experiences on Katana and potentially other compatible platforms, mitigating the volatility risks that have historically limited Bitcoin’s DeFi utility.

The successful funding round and strategic partnerships underscore BitVault’s potential to play a pivotal role in the evolving DeFi ecosystem. As the stablecoin infrastructure matures, it could catalyze broader institutional and retail participation in Bitcoin DeFi, fostering innovation and expanding the utility of the world’s largest cryptocurrency.

References:
[1] https://crypto.news/bitvault-to-launch-btc-backed-stablecoin-on-katana-chain/
[2] https://www.ainvest.com/news/bitvault-secures-2-million-pre-seed-funding-btc-backed-stablecoins-2506/