Mainstream capital is rushing into BTCFi, and DeFi infrastructure providers like bitSmiley are also eager to establish their presence.
Written by: Haotian
Seeing that @bitsmiley_labs has secured $10M in new funding to accelerate its vision of launching the Bitcoin-based stablecoin bitUSD. So, what exactly does this BTCFi stablecoin project, affectionately referred to as "Smiley," aim to achieve? What is its core technological framework? Why is the BTCFi market receiving unanimous enthusiasm from the market? Here are my thoughts:
1) The Ethereum DeFi ecosystem originated from MakerDAO's DAI algorithmic stablecoin, ultimately fermenting through the governance incentives of the Compound lending platform, igniting a wave of DeFi summer. To seize the first-mover advantage in the BTCFi market, bitSmiley #SMILE has combined DeFi infrastructures like MakerDAO (DAI) and Compound (Lending) to launch three main components:
bitUSD: An over-collateralized stablecoin protocol, comparable to DAI, where users can deposit Bitcoin into the bitSmiley Treasury to mint bitUSD; it adopts the bitRC20 standard to maintain high transparency while collaborating with ZetaChain for a native cross-chain bridge, ensuring circulation in a full-chain environment;
bitLending: A native trustless lending protocol that uses peer-to-peer atomic swap technology for transaction matching, while introducing an insurance system to optimize the shortcomings of traditional lending's clearing process;
Credit Default Swaps (CDS): An innovative derivatives protocol that integrates NFT slicing CDS and employs an aggregated bidding method to enhance the efficiency and fairness of the CDS market.
2) The specific experience of its product components needs to be further evaluated. To illustrate, I will mainly discuss two core technical points:
- Native cross-chain collaboration with @zetablockchain: ZetaChain is a POS blockchain built on the Cosmos SDK and Tendermint PBFT consensus engine, providing a series of interoperability operations embedded in a specific chain within a full-chain environment. Since Bitcoin does not have smart contracts, it can deploy light nodes and perform multi-signature operations based on the ECDSA signature algorithm. ZetaChain only needs to effectively track and manage UTXOs on Bitcoin to achieve secure cross-chain functionality.
Moreover, since ZetaChain is an Ominichain smart contract aimed at a full-chain environment, theoretically, after resolving cross-chain issues with the Bitcoin network, it can leverage its full-chain circulation environment to achieve transparent management of all-chain assets.
- The bitRC20 standard resembles the BRC20 inscription standard, and indeed, bitUSD draws from the asset paradigm of issuing assets on the Bitcoin mainnet. When users want to over-collateralize BTC, they can first bridge assets to bitSmiley's official bridge. After the bitSmiley layer2 chain confirms the user's collateralized assets and performs consensus verification, it will relay the information to mint bitUSD on the Bitcoin mainnet.
Since traditional BRC20 inscription minting requires pre-setting the total amount, bitRC20 introduces Mint and Burn operations specifically for stablecoin scenarios to meet the dynamic supply adjustment needs of stablecoins. This essentially highlights the significance of the indexer; this flexible inscription issuance method is more likely to gain practical application and empowerment for projects.
That's all.
Ultimately, it is not difficult to see why mainstream capital is rushing into BTCFi, and DeFi infrastructure providers like bitSmiley are also eager to establish their presence.
On one hand, everyone is eyeing the vast asset increment space in the BTCFi market. With the current total locked value in the BTC network at $1.6 billion, it only accounts for 0.14% of the total BTC market cap, compared to the 50-100 times growth potential in asset locking rates of networks like ETH and Solana. The funding sources are not limited to on-chain; there is also significant off-chain demand behind the large BTC+ETH ETF funds.
On the other hand, I believe that mastering the strategic positioning of stablecoins, lending, derivatives, and other applications of core BTC assets will radiate application scenarios across the entire full-chain environment, revitalizing and leading innovation in the DeFi model and user experience of the full-chain environment.
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