Botanix Labs raises $8.5 million to build a Bitcoin-native DeFi ecosystem

Bitcoin BTC -0.40% development startup Botanix Labs has raised $8.5 million in a seed series funding round from Polychain Capital, Placeholder Capital, Valor Equity Partners and ABCDE to build a Bitcoin-native DeFi ecosystem.

Angel investors, including Andrew Kang, Fiskantes, Dan Held, The Crypto Dog, Charlie Spears, Altcoin Sherpa, Dovey Wan, Jebus, Icebergy, Crypto ISO, Davis (a.k.a., “KarbonBased”), Walt Smith and Domo (creator of the BRC-20 token standard) also participated in the round, according to a statement shared with The Block.

This latest raise closed in April, but the firm did not disclose a valuation or the structure of the round. Following a previously unannounced $3 million pre-seed round that closed in June 2023, Botanix Labs has now raised $11.5 million in funding. The pre-seed was structured as a simple agreement for future equity (SAFE). Edessa Capital, Curiosity Capital, UTXO Management, XBTO Ventures, Blocmates, Eric Wall and others participated in the earlier round.

The New York-based firm said the funds will be used to build the Spiderchain — a Bitcoin-native Layer 2 primitive with full Ethereum Virtual Machine equivalence. More specifically, Botanix Labs will deploy the capital to grow its existing team, focusing on product development.

Botanix Labs was co-founded by Harvard alumni and is led by Belgian polymath and Spiderchain inventor Willem Schroé.

“Our team at Botanix Labs is driven by the mission of building the infrastructure that supports a global financial system running on Bitcoin for the next 100 years,” Schroé said. “The Spiderchain can scale the Bitcoin ecosystem to eight billion users and unlock trillions in capital that has sat idle for years. We’re proud to have the support of so many industry veterans who share our vision for reshaping how the world thinks about building on Bitcoin.” 

What is Spiderchain?

Spiderchain’s name is derived from the process of securing funds from the Bitcoin base layer using a series of randomized, decentralized multi-sigs resembling a spider’s web, the team said.

The scaling technology enables applications and smart contracts running in the Ethereum ecosystem to be copied and run natively on Bitcoin “in minutes,” it added. Users can also withdraw from crypto exchanges like Coinbase, Binance and Kraken to a web3 wallet connected to the Layer 2 like MetaMask without using wrapped assets or leaving the Bitcoin network.

Botanix Labs authored a whitepaper for its EVM Layer 2 protocol in June 2023, with an early-stage testnet version released in November.

Botanix claims the testnet has since generated more than 200,000 active addresses, 10,000 “experimental” token launches and dozens of decentralized applications ahead of an anticipated mainnet launch of the Spiderchain in early summer this year. Dapps announced so far include the decentralized exchange Bitzy and bitcoin-backed stablecoin Palladium.

Why Spiderchain is different from other Bitcoin 'Layer 2s'

Following the success of Ordinals, there has been a resurgence in both developer and investment activity within the Bitcoin ecosystem. However, some projects describing themselves as Bitcoin “Layer 2” solutions, that are effectively centralized sidechains controlled by a single multi-sig, have been criticized for using that label.

Botanix Labs argues Spiderchain is different, running fully on Bitcoin, unlike many newer projects leveraging Bitcoin branding for protocols that run on separate blockchains like Ethereum, Internet Computer, Cosmos or Polygon. It uses bitcoin as its native asset and the EVM as its software layer in a decentralized network of multi-sigs where any node can participate as a key holder.

The Botanix team said it was proud to have been building the next generation of Bitcoin Layer 2 solutions during the bear market when few investors cared about the future of Bitcoin. The recent surge in venture investment and application development in the Bitcoin ecosystem underscores that importance, it added.

“Bitcoin has proven itself to be the most secure monetary network in history. Now it’s time to put bitcoin to work by transforming it from only being a store of value into a global monetary network that empowers the sovereignty of individuals,” Botanix Labs CTO and co-founder Armin Sabouri said.