Bringing DeFi to Bitcoin Ecosystem

It’s time to build DeFi money lego in the Bitcoin ecosystem

Decentralized finance (DeFi) movement was started in late 2018. Some Ethereum-based DeFi OG projects like Uniswap, ETHLend (now Aave), and Dharma have already been thriving since 2019. And this year, DeFi is the one that defi-ned the blockchain industry without a doubt. 

Unlike traditional finance or fintech, DeFi is bringing traditional financial instruments to an open, decentralized, and fast-paced ecosystem, allowing the creation of innovative projects that remove the need for centralized middlemen. That’s why everyone in the blockchain world wants a piece of the DeFi market, but how is every blockchain doing right now, and what should we pay the most attention to?

Ethereum: ETH Is Money and Money Legos 

The “magic internet money” is real — according to DeFiPulse, Ethereum’s TVL surpassed $10 billion — Ethereum is dominating the whole space. 

For developers and projects, DeFi helps them bootstrap without going through fundraising from traditional VCs and angels, so they can focus on building “money legos” on Ethereum, composing across multiple protocols. The composability of Ethereum really drives the innovation — also spur DeFi frenzy. 

On the users’ side, money incentive people, and liquidity drive the community. We see people taking out flash loans, earning interest on deposits, yield farming…

BUT… yield farmers, you don’t need your financial advisor to tell you that your money in DeFi is NOT 100% safe, you know that things like smart contract attacks, market manipulation, and more will potentially put your money at risk. And high costs of gas fees — well, waiting on a pending transaction on MetaMask while trying to add more ETH to speed up, that’s the DeFi world we’re living in. 

Maybe we can say these are some good problems to have to push people to work and innovate. Developers are now constantly fixing and improving things, and smart contract security auditing is on everyone’s to-do list (hopefully). Ethereum core devs are busy building and testing eth2 phase x. Plus, teams like Matter Labs and Optimism are rolling out (rolling up) a variety of L2 scaling solutions, which look very promising and optimistic. We’ll see what happens in the next couple of months. 

EOS, Polkadot, and Others: Mining Their Own DeFi Business

As you probably already know, DeFi is not just built on the Ethereum blockchain. With more and more trailblazers from blockchains like EOS, Cosmos, Neo, and others from the “Proof-of-Stake squad” start building their own DeFi ecosystem, the whole space is getting more and the more interesting. 

As a blockchain that is designed to be scalable and interoperable, Polkadot is now welcoming people to build DeFi protocols or stablecoin platforms with its Nominated Proof-of-Stake (NPoS) mechanism, an adaptation of Proof-of-Stake (PoS). 

And of course, DeFi on TRON is thriving — everything you can find on Etheruem, you can find on TRON, too. It’s always nice to see some “familiar faces”, right? 

WAIT… how about Bitcoin? Have we all forgotten about the largest blockchain and the only crypto (the word “Bitcoin”) that your grandma has probably heard of?

DeFi on Bitcoin: Is Bitcoin a Better Solution for DeFi?

Bitcoin is still the king in the crypto space. “More than $1 billion worth of Bitcoin (BTC) has now been tokenized to access decentralized finance protocols on the Ethereum network,” said Cointelegraph. People are building protocols to bring Bitcoin to the Ethereum-based DeFi — because — as we mentioned earlier, DeFi money incentive and liquidity drive the community. What if we build a DeFi ecosystem around Bitcoin itself and turn it into a source of liquidity?  

The good news is we have Blockstack — they’re creating Stacks blockchain that supports the DeFi space and beyond by connecting Stacks blockchain 2.0 to Bitcoin — the most secure blockchain, bringing smart contracts and dapps to Bitcoin, and providing useful tools for developers

When it comes to choosing a blockchain to build your Web 3.0 project on, you probably will look into things like the safety — you don’t want to put your user’s money at risk, developer tools, and the community. For the safety, Stacks 2.0 network implements Proof-of-Transfer (PoX) mining mechanism that anchors to Bitcoin security — as a reserve currency/asset, Bitcoin helps to reduce the risk and secure the network.

Bitcoin can do smart contracts, but can’t do loops by design. Blockstack Clarity programmable contracts could be a powerful and robust programming language for developers to build all kinds of dapps with ease because Clarity helps to reduce the smart contract vulnerability, and you as a dapp builder will be able to know what the program will do from the code. 

Safety, developer tools, and the community check all the boxes. So if you want to build a Bitcoin-centric project, create and deploy something new and innovative that provides value to people, or just build DeFi lego bricks and play around — like “gaming” Ethereum money legos in the Bitcoin ecosystem, to a relatively broad community (Blockstack has a large community with over 12K active members, and not to mention they’re going to expand DeFi to the Bitcoin with a much larger community), you should take a look at Stacks 2.0 and give it a try to see the magic of “PoX + Clarity”.

Do you think Blockstack Stacks 2.0 will be the next DeFi powerhouse? Let me know what you think. And now, it’s time to build. 

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