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Since its inception, the Bitcoin blockchain has undergone several transformations, leading to some hard forks and soft forks. Recently, Bitcoin core developers implemented the Taproot technical upgrade to increase transaction privacy and efficiency while at the same time introducing smart contract functionality on the legacy blockchain.
Among the benefits this upgrade delivered, Taproot will ensure significantly reduced transaction fees, which will play a key role in supporting projects that are connecting Bitcoin to the broader DeFi and NFT ecosystems. At the same time, the Taproot upgrade also increases privacy and security, thereby benefiting the entire community of Bitcoin users.
Several promising projects are already leveraging these newly-added features to that extent, thereby accelerating the growth and adoption of DeFi and NFTs on the Bitcoin blockchain. Here are some Bitcoin-based projects spearheading the legacy blockchain’s transition to new-age technologies.
A Layer-2 Revolution For The Bitcoin Network
While the idea of integrating DeFi into the Bitcoin network has been circulating for some time, RSK Network has successfully established the first Bitcoin-secured smart contract platform. To assure Bitcoin and the DeFi ecosystem achieve long-term sustainability, RSK’s promising solution adds value and functionality to the legacy network by enabling smart contracts on top of it.
By merging the best attributes of Bitcoin and Ethereum networks, RSK has positioned itself as a highly scalable and the first smart contract platform secured by the Bitcoin network. As a result, the RSK infrastructure enables trustless and transparent DeFi opportunities like lending, borrowing, trading, and earning interest on crypto assets.
RSK offers native-level support for all of Ethereum’s Smart Solidity Contracts and APIs, making it relatively simple for dApp developers to migrate their existing dApps into the Bitcoin ecosystem. Recently, the RSK ecosystem achieved 72% hash power, cementing its position as the best-performing Layer-2 solution on the Bitcoin blockchain.
When it comes to Total Value Locked (TVL), RSK has more than USD 134 million locked across the DeFi projects built atop of it. The platform has also amassed more than 50,000 active users within a short time. Additionally, the RSK ecosystem has settled over 259,000 smart contract transactions to date, further underlining the growing demand for Bitcoin DeFi.
Besides DeFi, RSK is concurrently facilitating NFT growth on the Bitcoin blockchain. For instance, Nifty Labs is currently building an RSK-powered NFT marketplace, which will enable creators to mint their NFTs on the Bitcoin blockchain directly. Users can also trade NFTs for a range of RSK-based tokens and stablecoins, including rBTC, RIF, DOC, RDOC, MOC, and others.
Finally, there’s the diverse range of RSK-based stablecoins, backed by Bitcoin (BTC) – the most liquid cryptocurrency. RSK-based stablecoin project MoneyOnChain offers the DollarOnChain (DoC) stablecoin, collateralized at a 1:1 ratio with BTC. Other platform-specific stablecoins such as RIF On Chain DeFi platform’s RIF Dollar on Chain (RDOC) and RSK’s native XUSD are pegged at 1:1 with the US Dollar.
DeFi Platform Leveraging Bitcoin And Layer-2
Built on the Bitcoin blockchain, Portal, a self-hosted wallet and cross-chain Layer-2 DEX, is committed to lowering DeFi’s entry barriers by facilitating a private and secure environment with the narrowest possible fees.
The platform blends the best features of the Bitcoin network and Layer-2 solutions to enable a fully censorship-resistant, trust minimized, and peer-to-peer DeFi ecosystem. Portal utilizes Fabric, its proprietary layer-3 peer-to-peer market for computation, to implement an ephemeral computation infrastructure using smart contracts across different blockchain platforms and smart contract-based chains.
Due to its design, Portal ensures that cross-chain contracts are moved to Layer-2 and Layer-3, thereby increasing the transaction speed and lowering the transaction costs. At the same time, it utilizes Bitcoin’s core features to maintain security, privacy, and transparency and BTC’s value to maintain liquidity. Simply put, Portal unlocks the Bitcoin network’s actual potential to achieve “true” decentralization.
Backed by leading investors like Coinbase Ventures and several others, Portal supports a wide range of DeFi services on the Bitcoin chain while maintaining anonymity within open and transparent markets. For instance, Portal DEX, the world’s first censorship-resistant Layer-2 cross-chain decentralized exchange (DEX), facilitates anonymous and zero-knowledge swaps. It eliminates the need for bridges to connect with other chains or asset wrapping (BTC to wBTC, etc.) before transferring digital assets from one chain to another.
Enabling Advanced DeFi Applications On Bitcoin
As a decentralized blockchain platform working towards enabling fast, intelligent, and transparent DeFi services, DeFiChain aims to bring full DeFi capabilities to the Bitcoin ecosystem.
Launched in 2019 on the Bitcoin network as a soft fork, DeFiChain is a fully decentralized platform that offers a wide range of DeFi services, including token wrapping, lending, borrowing, decentralized exchanges, asset tokenization, yield farming, pricing oracles, and much more. All transactions on DeFiChain are non-Turing complete, which makes them faster while lowering the gas costs and reducing the chances of smart contract errors.
Although constructed atop Bitcoin, DeFiChain employs a hybrid version of Proof-of-Stake (PoS) and Proof-of-Work (PoW) consensus mechanisms to facilitate transactions and incentivize network participation. It solves three critical problems that currently cloud the DeFi ecosystem: the problems of scalability, security, and decentralization.
Users can generate passive returns on their holdings using DeFiChain’s staking, liquidity mining, and dLoans features. By participating in the consensus mechanism of DeFiChain, users can earn as much as 63% APY. Alternatively, users can lend their assets to the platform’s DEXs and earn up to 100% APR. Finally, DeFiChain also offers instant collateral-backed crypto loans, with users eligible to mint dUSD from DFI, BTC, ETH, and USDC.