Portal and Polygon Partner to Boost Bitcoin in DeFi

December 17, 2021

The strategic partnership was announced recently and is a big step forward for Bitcoin usability in the DeFi space. 

Portal and Polygon are set to partner together to make the movement of digital assets across the decentralised finance ecosystem easier. The partnership will also unlock the lowest fees possible for movement of assets, which benefits global traders. 

Portal and Polygon will work together to merge Layer 2 and Layer 3 technologies and expand user capabilities

Both Portal and Polygon have similar visions as they both are committed to the use of Layer 2 and Layer 3 technologies. Layer 2 technology refers to a secondary framework that is built on top of a preexisting blockchain system. Layer 3 technology, also known as the application layer, allows applications to run on blockchains. The partnership between Portal and Polygon will expand user capabilities and enable zero-knowledge swap functionalities (enabling data to be verified without revealing that data, therefore holding the potential to revolutionise how data is collected, used and transacted with).

Who are Polygon? 

Polygon offers a scaling solution for Ethereum which has allowed it to become the primary settlement layer of the expanding web 3.0 ecosystem. It works to connect Ethereum-compatible blockchain networks into one multi-chain system. Their main goal is to “create, issue, and manage digital securities on the blockchain.” 

Who are Portal? 

Portal is a decentralised financial platform that allows for fast and secure swaps between Bitcoin and other digital assets. It is a decentralised finance ecosystem that is built on Bitcoin and offers anonymous, zero-knowledge atomic swaps through their cross-chain DEX. Their goal is to “create a self-governing, anonymous and uncensored ecosystem for Bitcoin on DeFi.”

Portal’s executive chairman Dr. Chandra Duggirala said: “Given that Portal is a DeFi layer on Bitcoin, we are excited to partner with Polygon to enable WBTC/BTC and POS-WBTC to BTC swaps. We believe that having liquid markets and enabling price discovery will appropriately price wrapped Bitcoin based on risk and enables increased usability for Bitcoin.”  WBTC refers to a ERC-20 token that represents Bitcoin on the Ethereum blockchain. 

Though this partnership is very promising, there are challenges that will have to be overcome in the future 

The challenges surrounding DeFi are currently tied to low liquidity and difficulty switching between blockchains. There are currently not enough traders available to sustain the number of currencies and tokens being exchanged. This has left current systems congested. Difficulties also arise when exchanging digital assets that have low liquidity, as money may not be received or exchanged on time. This is a significant issue in the decentralised financial system. The partnership between Portal and Polygon is set to rectify these issues, by combining Layer 2 and Layer 3 technologies. 

The Portal and Polygon partnership will go a long way in rectifying current issues within the decentralised financial system

This partnership will help fix issues with moving digital currencies across the decentralised financial system. Portal will allow Polygon to run a facilitation node on Portal DEX in order to provide liquidity for atomic swaps between Bitcoin and other digital assets such as POS-WBTC. This will also allow for private, off-chain execution and eliminate the need for third-party custody or control. 

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