Original | Odaily Planet Daily (@OdailyChina)
On October 28, the Bitcoin-native stablecoin project bitSmiley announced the successful completion of a $10 million Series B funding round, with participation from several well-known investment institutions including MH Ventures and Skyland Ventures. This funding round signifies that bitSmiley has gained a significant first-mover advantage in the liquidity expansion and diverse application scenarios of Bitcoin decentralized applications. Based on past project data, it has already established itself as the "leader in BTC over-collateralized stablecoins," and is expected to inject new vitality and energy into the BTCFi sector. On the other hand, with the U.S. election results approaching, regardless of who ultimately wins, based on the past statements of both Trump and Harris, a crypto-friendly environment seems inevitable, which may further promote the development of the BTC ecosystem, including BTCFi, and the mainstreaming of cryptocurrencies. For ordinary market users concerned about returns, the upcoming bitSmiley token will be launched on Bybit Launchpad and Gate Startup Prime, and based on past performance, a 10x return is worth looking forward to.
The meme craze sweeps the crypto market; can the BTC ecosystem leverage this momentum to usher in a new bull market cycle? Odaily Planet Daily will analyze this article with bitSmiley as a starting point for readers' reference.
BTCFi - One of the Hot Narratives in the Upcoming Bull Market with New BTC Highs
With the situation in the Middle East easing somewhat in the short term, combined with the views of several industry figures in the crypto market who believe that "Trump's election as the 2024 U.S. President will help BTC break new highs and initiate a new round of crypto bull market," the BTC price has once again risen above $73,000. Consequently, the BTC ecosystem is thriving, described as having "broad space and great potential." Among this, the BTCFi sector is expected to bring a new wave of liquidity to the cryptocurrency industry.
Data released earlier by CryptoCompare and CoinGecko shows that the market size of the BTCFi sector has reached $10 billion in 2023. According to DefiLlama's predictions, by 2030, the market size of BTCFi is expected to grow to around $1.2 trillion (notably, this figure includes BTC's TVL in the DeFi ecosystem, as well as the market size of Bitcoin-related financial products and services).
In recent years, the BTCFi market has attracted more and more institutional investors due to the growth potential driven by the continuous development of the BTC ecosystem. TradFi institutions such as Grayscale, BlackRock, and JPMorgan have also begun to enter the BTCFi market. The participation of institutional investors has not only brought in a large influx of funds, increasing market liquidity and stability, but has also enhanced the maturity and standardization of the market, bringing higher recognition and trust to the BTCFi market.
The underlying reasons can be summarized in the following three aspects:
1) Strong investment demand. The market's investment demand for BTC is increasingly robust: net inflows into BTC spot ETFs are continuously increasing; BTC's market cap share once approached 60%, reaching a new high since 2021; additionally, after the price rebounded to $69,000, the proportion of profitable BTC addresses reached as high as 96%, likely attracting more hot money into the market.
2) Market narrative shift: After experiencing several industry waves such as DeFi, GameFi, and NFTs, Ethereum's innovation momentum has somewhat waned; the once "Ethereum killer" Solana has gradually become the main battleground for meme coins, while the TON ecosystem has temporarily fallen silent after games like Notcoin and Hamster; leveraging the expectation of new BTC price highs, BTCFi will become a key narrative to unlock more liquidity following innovations like BRC20 inscriptions and runes.
3) Reusing ecological pathways: In terms of ecological development, the BTC ecosystem was previously limited by its inability to execute programmable interoperability, making it less scalable compared to the Ethereum ecosystem. However, with the emergence of the BRC20 protocol, the BTC ecosystem has opened up a new "ecological development path," allowing it to draw on the development model of the Ethereum ecosystem, starting from the DeFi sector to activate global liquidity, thereby driving a broader range of capital flow. This is also one of the key reasons why many RWA sector projects, asset management funds, and listed companies are investing in the BTC ecosystem.
In this process, it is worth mentioning that Tether, a stablecoin issuer established in 2014, and MakerDAO's over-collateralized stablecoin DAI laid a solid foundation for Ethereum's DeFi Summer, which is also a crucial factor in whether BTCFi can rise.
Specifically, the role of stablecoins in the development of the BTC ecosystem within the BTCFi sector includes:
1) Introducing more liquidity: Facilitating the two-way exchange of assets on other ecological networks;
2) Expanding BTC ecosystem product application scenarios: With the help of stablecoins, the BTC ecosystem will incorporate various plays such as lending, futures, and derivatives;
3) Connecting the value chain of BTCFi and accelerating ecological construction: Stablecoins are to blockchain networks what blood is to the human body; with stablecoins, the value chain within the BTC ecosystem will be restructured, allowing projects, products, and applications from different ecological niches to achieve efficient interaction, thereby accelerating the pace of BTC ecosystem construction.
In this regard, the current landscape of stablecoin projects in the BTC ecosystem presents a "one ahead, many behind" state, particularly with bitSmiley's bitUSD leading the way.
Most other projects are still in the early stages, and stablecoin products have not yet been launched, mainly divided into two categories:
First, those in the preliminary financing stage, including the BTC liquidity protocol and stablecoin issuer Yala, which completed an $8 million seed round of financing on October 10 (led by Polychain Capital and Ethereal Ventures, with follow-on investors including Galaxy, Anagram, Amber Group, ABCDE, Ambush Capital, GeekCartel, HashKey Capital, L2 Iterative Ventures, SatoshiLab, UpHonest Capital, UTXO Management, and 280 Capital), and Plasma, which completed a $3.5 million financing on October 18, compatible with EVM systems (led by Bitfinex, with participation from Christian Angermayer and venture capital firms Split Capital, Anthos Capital, Karatage, and Manifold Trading, focusing on the concept of "supporting Bitcoin to pay network gas fees while integrating Ethereum's account-based model").
Second, those whose products are still in the very early stages or even in the "paper news" stage, such as RUSD, an over-collateralized stablecoin based on the Stable++ protocol that went live on the mainnet on October 18. As of October 25, its TVL was only $658,000, with less than 250,000 RUSD minted; regarding Tether, the "stablecoin giant," the last news about its "plan to reissue USDT on the BTC ecosystem's RGB protocol" was back in August 2023, and subsequent news has been sparse, perhaps because its existing business profits are sufficiently rich, and it has no intention of joining the BTC ecosystem stablecoin battlefield for the time being.
Compared to the "slow-moving" newcomers and old players like Plasma, Seal, Yala, and Tether, bitSmiley has already made its move, with its bitUSD becoming the "cornerstone product" in the BTCFi ecosystem.
Entering bitSmiley - The "Cornerstone Player" and Popular Product bitUSD in the BTCFi Ecosystem
As a "key player in the BTC ecosystem" known as the "MakerDAO of the BTC ecosystem" and "leader in BTC ecosystem stablecoins," bitSmiley has become a "cornerstone player" in the BTCFi ecosystem, and this is thanks to its launch of the first native over-collateralized stablecoin in the BTC ecosystem - bitUSD.
BitSmiley Official Website Interface
It is understood that bitUSD aims to address the most critical and core issue in the BTC ecosystem - asset yield and value circulation. Currently, its on-chain holding addresses exceed 20,000 (as of the time of writing, the number of addresses is 21,575), with a TVL exceeding $30 million and over 40 ecological cooperation projects, leading the BTC ecosystem in terms of financing scale, data performance, and ecological cooperation without dispute.
Specifically, the advantages and details of bitSmiley and bitUSD include the following aspects:
bitSmiley - Creator of bitUSD
1. bitUSD: The Native Over-Collateralized Stablecoin of the BTC Ecosystem
Before the emergence of bitSmiley, the unified settlement currency in the BTC ecosystem was BTC and SATS, which were significantly affected by market fluctuations. However, after the launch of bitUSD by bitSmiley, this situation has greatly improved.
According to information from the official website and official documents, bitSmiley has built the BTC ecosystem's DeFi protocol standard - the bitRC-20 protocol based on the BRC20 inscription protocol standard. On this basis, it created the BTC-native over-collateralized stablecoin bitUSD. Notably, bitRC-20 can be seen as an extension of BRC20, making it compatible with BRC-20, and it supports minting and burning operations to meet the needs of stablecoin issuance and redemption. Users can over-collateralize BTC to exchange for bitUSD, and each circulating bitUSD token has corresponding over-collateralized assets as support. All transactions of bitUSD are publicly transparent on the Bitcoin blockchain.
The overall minting logic is as follows: 1) Users over-collateralize BTC on the Bitcoin mainnet; 2) Oracles transmit the corresponding information to bitSmileyDAO, awaiting consensus verification; 3) After consensus verification is completed, bitSmileyDAO will relay the Mint bitUSD information to Bitcoin mainnet validators, ultimately completing the minting of bitUSD. The redemption logic is the opposite; when users redeem their collateral, the corresponding bitUSD will also be burned.
Based on the above information, we can conclude that bitUSD is similar in nature to over-collateralized stablecoins in the Ethereum ecosystem, possessing value storage, exchange medium, pricing unit, and deferred payment standard.
In terms of application scenarios, several BTC ecosystem lending projects, including ENZO Finance, Avalon, and PanterFi, have opened support for bitUSD (as collateral or for borrowing bitUSD); at the same time, bitUSD can also participate in multiple Launchpad platforms for new projects, including Merlin Starter, Pumpad, and BRC Starter. Additionally, within the bitSmiley protocol, bitUSD can be used to repay debts, such as paying stability fees or loan interest.
As for bitSmiley's liquidation method, it involves auctioning future platform revenues as debts through English auctions. The profits of the future platform, after deducting basic operating expenses, will prioritize repayment to creditors. This method is superior to traditional token inflation repayment methods, avoiding the dilution of token holders' interests.
Based on the core stablecoin, bitSmiley can further expand to create DeFi products that align with the BTC technical roadmap, building on peer-to-peer lending supported by its stablecoin, and layering advanced derivatives such as insurance and CDS, thus providing new gameplay for BTCFi.
With the emergence of bitUSD, users can directly use it as a stablecoin for application currency within the BTC ecosystem. Future products that users can participate in include the native trustless lending protocol bitLending, the derivatives protocol bitInsurance, the Bitcoin-native AMM bitCow, and the consensus governance organization bitSmileyDAO composed of bitUSD holders (holders can participate in decentralized governance, including adjusting collateral types, LTV ratios, and other key protocol parameters, as well as emergency shutdowns in case of uncontrollable attacks).
In addition, the product design of bitSmiley incorporates retro pixel elements, and its official logo is a pixelated smiley face, which is not only highly recognizable but also aligns with the current meme craze that is highly sought after. Based on this, the project community and the crypto market have produced numerous related derivative creations, which are highly engaging and have a strong viral potential.
bitSmiley Related Meme Creations
2. Ecological Cooperation Landscape
As a stablecoin protocol in the BTC ecosystem, BitSmiley has now established various degrees of cooperation with over 40 high-quality projects.
Among the more well-known projects are BitLayer, Merlin Chain, BEVM, Bob, B² Network, Nubit, and other prominent BTC L2 networks; oracle projects such as Pyth Network and Apro Oracle; as well as L1 networks like ZetaChain and the star project in the BTC ecosystem, Babylon.
It is worth mentioning that as the first real over-collateralized stablecoin project in the Bitcoin ecosystem, bitUSD has avoided a series of adverse events such as de-pegging and liquidation during its more than half a year since launch, highlighting bitSmiley's strong competitive advantage compared to other competitors.
At the same time, the integration with ZetaChain will help bitUSD extend liquidity to any blockchain network in the future, increasing liquidity scale, making it the "first project capable of minting over-collateralized stablecoins using BTC L1 network as collateral." According to official cooperation document information, the specific technical implementation details involve a new protocol layer built on the Bitcoin Taproot upgrade's Tapscript, allowing users to easily deposit native BTC and mint bitUSD stablecoins; developers can directly unlock BTC liquidity in DeFi through general applications on ZetaChain. This innovation breaks the 80-byte limit in previous OP_RETURN-based cross-chain transactions, bringing new upgrades to ZetaClient, enabling the use of inscriptions to witness data and increase byte size, while mapping the hexadecimal addresses between user BTC wallets and EVM wallets for a smooth user experience.
The integration with Babylon will expand the categories of collateral for bitUSD to various BTC LST assets, with expectations to capture a significant portion of its TVL in the future, achieving ecological win-win.
In addition, DeFi projects, GameFi projects, BTC ecosystem native wallets, and AI projects are also among bitSmiley's partners, showcasing the richness of its ecological landscape.
BitSmiley Ecological Landscape
3. Project Achievements
It is noteworthy that prior to the recent announcement of the $10 million Series B funding, bitSmiley had completed its first round of token financing in January this year, with the specific amount unknown, led by OKX Ventures and ABCDE, with participation from numerous angel investors from organizations such as CMS Holdings, Foresight Ventures, LK Venture, Silvermine Capital, Waterdrip Capital, Blockchain Founders Fund, ArkStream Capital, 7UpDAO, CGV FoF, Momentum Capital, Candaq Funtech, Comma3 Ventures, and Delphi Digital.
Overview of bitSmiley's First Round Investors
Not only that, bitSmiley's previous bitDisc-Black series of inscription NFTs attracted over 40,000 addresses to participate in minting; within 5 hours of launching on the OKX NFT Marketplace, the trading volume exceeded 20 BTC, with the floor price reaching as high as 0.036 BTC (approximately $2000+), making it one of the leading projects in the BTC ecosystem with significant wealth creation effects.
OKX NFT Marketplace Information
It is worth mentioning that bitSmiley's previous series of airdrop activities had high thresholds, such as the testnet being invitation-only, and the test token airdrop was only available to bitDisc-Black (commonly known as black card) holders or community activity users who underwent multiple verifications. The participation threshold for its mainnet points activity was also set at 0.1 BTC, which is the minimum collateral amount for minting bitUSD. As a result, bitSmiley has gathered a group of active builders and loyal users in the BTC ecosystem, laying a solid foundation for future development.
4. Future Development Plans
According to previous financing news, bitSmiley aims to provide robust liquidity support based on a combination of over-collateralization and native BTC lending mechanisms, striving to bring users a safer and more transparent on-chain DeFi experience in the BTC ecosystem. The seamless cross-chain trading capability it is building is expected to break the ceiling of the BTCFi track and further expand the market scale of the BTC ecosystem.
bitSmiley Official Website Interface
According to its official announcement, bitSmiley's TGE is also set to join the schedule. It is reported that its token SMILE has a total supply of 210,000,000 tokens, with different utilities including governance, participation in surplus auctions, discounts on stablecoin fees, and priority liquidation. Among them, 3% of the total supply has been locked as staking rewards for bitDisc-Black, which will be distributed based on the number of bitJade held by users. Its official website has now opened for staking reward inquiries.
It is noteworthy that, as mentioned at the beginning of the article, the SMILE token is about to launch on Bybit Launchpad and Gate Startup Prime for IEO. The former has launched 35 IEOs this year, with an average peak return rate of up to 20 times. Combined with bitSmiley project data, this time the peak return is expected to reach 15-25 times, with an average return starting at 10 times; the latter is a "flagship product," with only 6 Prime projects among 279 Start Up projects this year, accounting for about 2.15%. At the same time, SMILE will be the Prime project that Gate reopens after 5 months, highlighting bitSmiley's strength and the importance placed on it by exchanges, indicating that the BTCFi track is thriving, and bitSmiley is well-timed.
As bitSmiley co-founder J Yee previously stated, bitSmiley will further optimize the infrastructure construction of BTCFi, expand the team size, and accelerate the launch of innovative features, striving to promote the broader application of BTC in the DeFi field.
Conclusion: bitUSD May Become the Key Lever to Propel the BTCFi Bull Market
According to DefiLlama website data, the largest over-collateralized stablecoin issuer in the Ethereum ecosystem, MakerDAO, has a total TVL of $4.44 billion, with over 500,000 on-chain holding addresses. In comparison, bitSmiley, which firmly holds the leading position in the BTC ecosystem's over-collateralized stablecoin track, still has enormous potential for future development. With the support of bitUSD, the value circulation system of the BTCFi track is becoming increasingly mature, and combined with various existing market benefits, it may become the key lever to ignite the BTC ecosystem bull market.
After all, compared to MakerDAO, which uses Ethereum as collateral, bitSmiley has chosen "digital gold" BTC as collateral—higher market value, better liquidity, and greater demand. There is no doubt that the gradual expansion of the BTCFi track will also drive the rapid growth of bitSmiley's TVL, and its token SMILE is expected to follow in the footsteps of MakerDAO's token MKR, creating a wealth miracle comparable to the "crazy increase of up to 50 times at the peak of MKR's launch."
Many people say that if they could go back in time, they would seize the wealth opportunities of tokens like Ethereum, UNI, and MKR; now, with bitSmiley's bitUSD emerging as the "native over-collateralized stablecoin leader in the BTCFi track," whether one can seize this opportunity still depends on the subjective choices of each market user.
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