Introduction to Velar (VELAR): A DeFi Project in the Bitcoin Ecosystem with High Volume Potential

Bitcoin, the oldest blockchain network in the crypto world, has experienced significant growth in recent years.

From being just a place for transactions, Bitcoin has now evolved and grown into a place to build applications with the help of the second-layer blockchain.

Along with this growth, applications in the Decentralised Finance or DeFi sector have also seen growth in the Bitcoin ecosystem, fulfilling the original purpose for which Bitcoin was created.

One of the projects currently under construction and predicted to be one of the largest in volume is Velar, a DeFi project that is thought to bring $500 Billion in transaction volume into the Bitcoin ecosystem.

What is Velar?

Velar is a DeFi project that aims to increase transaction liquidity on the Bitcoin Blockchain. In its application, Velar has several products including a decentralised exchange or DEX, an earn feature through locking tokens in a liquidity pool, and several other products such as a token launch platform or IDO.

Velar is built on the Bitcoin Blockchain with the help of its second layer, Blockchain Stacks. Stacks is a blockchain that is connected to the Bitcoin Blockchain so that developers can build projects and launch them on the Bitcoin Blockchain.

Stacks itself has its own native coin called STX which in the Velar ecosystem will be used as a transaction tool.

In addition to STX, Stacks also launched its network version of Bitcoin to prevent transaction breakdowns that connect directly to the Bitcoin Blockchain so that there are no errors in recording in each block.

The Stacks version of Bitcoin is called sBTC, which is also the main transaction tool in the Velar ecosystem and a platform to reach the target transaction volume of up to $500 Billion.

The $500 Billion target is the main reason why Velar has become suddenly famous in the Bitcoin ecosystem, because many assume that with the issuance of that much sBTC, there will be a large volume of transactions originating from BTC or real Bitcoin.

Velar itself was founded in March 2023 by four individuals engaged in technology, blockchain, and business.

The CEO of Velar, Mithil Thakore, is an expert in the field of business because of the many companies he has built in five years.

Some of his businesses are in the crypto and blockchain space, so his experience can be a strong help in building Velar.

The team behind Velar also has more than 5 years of experience each, making them strong enough to build Velar into a fast-growing project and app.

The main goal of establishing Velar is to build a DeFi ecosystem on the Bitcoin Blockchain to fulfil Bitcoin's capabilities as a secure and decentralised network.

With the majority of DeFi applications falling victim to hacks in recent years, the team behind Velar promises to restore the good name of DeFi by utilising the security provided by the Bitcoin Blockchain.

Velar Ecosystem

Velar has five products in its ecosystem, two of which have already launched on the main network but in beta.

1. Velar DEX

First up is the Velar DEX which is a live crypto buying and selling platform utilising the Bitcoin network.

While Bitcoin is known as a network with high transaction fees, Velar currently does not charge high transaction fees to its users.

The low transaction fees are due to the adoption of Stacks Blockchain technology so that transactions are executed not on the Bitcoin network but on second-layer networks such as Stacks and several others such as Lightning Network, TARO, and RSK.

This mechanism ensures that network transaction fees remain low and Velar still does not charge any additional fees.

In the future Velar has plans to implement an additional transaction fee on its app of around 0.3% per transaction, of which 70% will go to the liquidity pool, 5% to VELAR stakers, 20% to Velar's deposit fund as a company, and 5% to Velar's Liquidity Pool Multiplier.

This transaction fee still seems low, so with a relatively low overall fee, Velar ensures that all users can transact comfortably and encourage high transaction volumes on its application.

Unfortunately, there is currently a small selection of cryptocurrencies available in its ecosystem, namely STX, xUSD, and xBTC, with more tokens to come.

Eventually, Velar will have a selection of tokens and assets that can be traded on its app including crypto-based perpetual futures contracts.

2. Liquidity Pool

The second product is the liquidity pool or token locking pool to maintain the liquidity of the app so that transactions can continue to occur without having to experience congestion.

This product ensures that users who lock their tokens can make passive profits and at the same time helps to keep transactions on the Velar app happening.

Currently, the token pairs available for locking are STX-xUSD and STX-xBTC, but more pairs will be available in the future, according to the Velar team.

Currently, the value of tokens locked in the Velar app or Velar TVL has reached around $17,140, which proves that Velar is still relatively new.

The annualised profit per annum or APR applied for token locking currently stands at 1% to 1.6%, depending on the type of token used.

Users will benefit through transactions on the Velar app where one of the potential rewards is a VELAR airdrop. But all of this is speculation as there has been no official announcement yet but Velar is pushing the transaction volume of sBTC and VELAR itself.

For now, there are two wallets available for use in the Velar app, Leather Wallet and Xverse. Users can try them out without spending real capital as there is currently a beta or trial version that can be used by everyone.

To complement these two products, Velar also integrates sBTC Bridge, which is a bridge to facilitate the conversion of BTC into sBTC so that users can transact cheaper and faster.

Future Plans

In addition to these products, Velar also has several products available on the trial network. Velar also provides a Faucet where users can get STX for free on the trial network to try out all the features in the Velar app.

Currently, users can get 101 STX for free on the test network or testnet so they don't have to spend real money to try the app until it officially launches with all the features.

The STX can be exchanged for other cryptos and can be used to try out several features such as locking or staking and farming.

Unfortunately for now, if you want to try exchanging STX for other cryptos, users have to wait quite a long time, which is about 15 minutes on the Velar trial network on Blockchain Stacks. But this speed is still much faster than the Bitcoin network itself.

For staking, users can exchange STX to VELAS and try using the product to calculate potential profits later if it is officially launched.

Unfortunately for now, official information regarding how much profit per year has not been given to users so that when trying, users can only feel how the locking and cashing mechanism will be carried out.

In the farming product, users can currently try two token pairs on the trial network, namely wSTX-sBTC and wSTX-VELAR. Just like in the staking product, unfortunately the annualised profit information for farming has not been provided to users.

Finally, Velar will also launch its own IDO platform but it is still being developed and cannot be tried out because it has not been officially published on its network.

For now, there is no official information about the launch date of these products.

However, there are estimates that all the launches will take place in the first half of 2024. Over time, Velar will continue to evolve into four versions with the latest being the best.

The aim is to improve the app's ability to provide more cryptocurrencies and blockchains that can be used in the app as well as lower transaction fees and highlight governance features to encourage decentralisation in the app.

The second version of Velar will be launched in the first half of 2024 with the main goal of providing governance features for VELAR owners and providing a bridge for Velar to move across more blockchains.

VELAR Token

Please note that currently the Velar Token has not been officially launched, but there is information that the launch will be held in the first half of 2024.

The total supply of VELAR will be 1 Billion VELARs with a fixed nature, which means that the amount will not increase.

The allocation of tokens to the team, advisors, and early investors looks relatively fair at 40% but is risky as the large amount could affect market confidence and lead to assumptions of potential price manipulation.

An allocation of 20% will be kept for the purposes of Velar's reserve fund as a company to develop its ecosystem.

Finally, 40% will be given to public investors and the community through airdrops and token lock rewards. There is currently no public sale narrative, but that could change in the first half of 2024.

The vesting period of VELAR is still not rumoured, but the Velar Team will make an official publication around the first half of 2024.

VELAR will be used for a number of things including governance features for voting token holders against or in favour of changes in the Velar ecosystem, for payment of transaction fees, and for rewards for the Velar community.

Overall, VELAR will act as a transaction tool and governance tool at the same time, which will make it highly usable and minimise its token's downward movement due to underuse.

Conclusion

The DeFi Velar application is predicted to bring high interest in the Bitcoin ecosystem, especially towards the bull market in 2025. However, there are several things to consider, namely related to the token release or vesting period, the use of company funds from token allocations, and the overall application of Velar.

Given that 40% of all tokens will go to Velar's team, advisors, and early investors, there is a possibility that the price could be manipulated given the relatively large allocation.

Coupled with the company's reserve fund which makes up 20% of the VELAR Token allocation, if the team decides to cheat, there is a possibility that the VELAR price will rise and fall rapidly, or be the result of price manipulation.

However, based on the track record of the founders and the team behind Velar, the possibility of price manipulation is very small, so VELAR is still safe.

Another thing to keep in mind is that the Velar app is still relatively new, so keep in mind that there have not been many real-world trials conducted especially considering the number of attacks on the DeFi app. The transaction conditions on the app are also still very low which brings potential liquidity risks to its users.

But both problems can still be solved over time, especially with the many changes that will occur in the future.

Looking at the current state of its social media, it appears that Velar has the potential to become one of the projects leading the Bitcoin ecosystem.

Therefore, if interested in supporting this project through the purchase of VELAR, it is better for investors to maintain risk management in order to preserve capital in the long run.