Taking stock of new DeFi opportunities in the Bitcoin ecosystem

23-12-01 16:00

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Original Title: "BTC Ecological Flourishing and Defi New Opportunities"

Original Source: veDAO

BTC's ecosystem has had a series of impressive performances this year, with various new native protocols emerging one after another. The ecosystem surrounding protocols such as Ordinals, Lightning Network, Stacks, RGB, and Atomicals has quickly become rich and diverse, with no shortage of potential projects worth paying attention to. What's more, Bitcoin's recent strong performance has dominated the market's hotspots and attracted more capital inflows. BRC-20 and BTC ecosystem tokens have seen a significant increase in value, presenting many investment opportunities. This issue will analyze the pros and cons of investing in the BTC ecosystem market at this time and share an inventory of potential Defi projects.

Source: Coinmarketcap November 21, 2023

Analysis of the Pros and Cons of the Bitcoin Ecosystem

Advantage Analysis:

1. Market hotspots track

Due to the past month, the price of Bitcoin has risen from $25,000 to $38,000, an increase of over 50%. This upward trend is enough to attract market attention in the short term, with a large amount of capital entering the BTC ecosystem from both professional investment institutions and individual investors or speculators.

2. Market hot money & market newcomers

The attention and discussion brought by the continuously rising backbone BTC price have brought a large amount of capital into the BTC ecosystem, which not only helps to promote the development of existing new projects, but also provides the most needed nutrients to incubating projects. With the market validation of new concepts such as Ordinals and BRC20 after half a year, the sharp rise of ecological tokens has also allowed more newcomers who were previously watching to enter the market with market confidence. The growth of funds and players makes the entire BTC ecosystem operate in a healthy cycle, and can also make the entire ecosystem more sustainable.

3. Existing protocol upgrades & emergence of new protocols

BTC ecology has been activated since the emergence of Ordinals protocol and BRC20 tokens at the beginning of the year. Subsequently, ORC20, Atimicals, Stacks, Lightning Network, RGB, Taproot, BRC100, BRC420, Rootstock, BEVM and other BTC ecological protocols have contributed to the development of the ecology, indicating that the ecology is very vibrant and in an active development stage. This time, with the injection of multidimensional forces into the Bitcoin chain, it is foreseeable that more new protocols will emerge, and more protocol plans can be carried out as planned. Tokens can be smoothly issued, Defi liquidity can be more abundant and stable, trading pairs can be more diverse, Gamefi can truly run and introduce more players, NFTs can have more varieties and popular products can emerge, and infrastructure can be continuously improved.

4. Small investment, big return opportunity

First of all, the threshold for investment participation is relatively low, which is a common advantage in the BTC ecosystem, because many gameplay methods are brand new, such as the initial inscription carving, players can easily experience the latest gameplay, and also participate as an investment behavior. For example, players who participate in Mint sats tokens have seen their prices increase by 10 times, and the highest price has increased by more than 15 times. Compared with projects in the old ecosystem, such high-yield opportunities are indeed rare. The BTC ecosystem is in a new development stage, with emerging new protocols and gameplay methods, bringing excitement and more opportunities to the cryptocurrency industry once again.

Risk Analysis:

1. In the early stage of ecological development, the infrastructure construction is not perfect enough, and basic operations such as hardware deployment are difficult to carry out, resulting in high costs. Moreover, most transactions that can be realized still require offline OTC transactions.

2. Indirect security issues exist due to the use of offline OTC transactions, which carry the risk of scams;

3. Poor user experience, most new protocols require a lot of waiting time for orders to be filled, resulting in long transaction delays and congestion.

4. When the heat and market trends cool down, it is important to carefully consider the impact on the ecosystem and bubble once the BTC price falls.

Highlight Project Sharing

1.ALEX

ALEX is an open-source Bitcoin DeFi platform based on the Stacks ecosystem. It is one of the most important protocols on Stacks, and as of the writing date, the TVL on Stacks has reached 18M, with ALEX's TVL accounting for 14M. ALEX offers products including Credit launchpad, DEX, order book, and futures contracts. It is like Uniswap on the BTC chain, allowing users to swap, stake, borrow, and mine liquidity in a fully decentralized way on the Bitcoin chain.

As a Defi platform, ALEX also provides non-liquidation risk lending, which provides users with a secure way to lock their assets in contracts to earn interest or perform other financial operations without worrying about liquidation risks caused by market fluctuations.

In the future, with the development of the Stacks platform and the iteration of Bitcoin technology, more and more projects will be built on Stacks. The Launchpad service provided by ALEX provides a place for these projects to launch. This is a very forward-looking feature and will greatly increase the sustainability of the ALEX platform.

ALEX has launched its own governance token $ALEX, with a current market value of $36 million and a circulating supply of 600 million tokens. This move also provides users with the opportunity to participate in the platform and potentially benefit from future appreciation. The project raised $5.8 million in November 2021 and $2.5 million in March 2023, for a total of $8.3 million in funding.

2.Arkadiko

Protocol Arkadiko is a decentralized liquidity protocol based on Stacks. The focus of this project is on the need for decentralized stablecoins in every ecosystem, and Arkadiko is the stablecoin project for the Bitcoin Stacks ecosystem.

Through Arkadiko, users can use their native token $STX of Stacks as collateral to mint Arkadiko's own stablecoin USDA, while the project also supports Swap and lending. USDA can be used to repay loans in the Farm within the Arkadiko protocol, and the profits of the Farm are generated through participation in the Stacks consensus mechanism called Proof of Transfer (POX).

3.Sovryn

Sovryn is the first non-custodial smart contract application for Bitcoin lending and margin trading on the Rootstock network. Sovryn is not a traditional Ethereum DeFi model, it allows its users to borrow, lend and utilize Bitcoin's inherent assets without sacrificing key custody. At the same time, users have direct speaking rights under the Bitocracy system protocol development governance. Sovryn also introduces EVM-compatible Ethereum-style smart contracts to Bitcoin, which is a very important innovation because developers believe that Bitcoin is the center of cryptocurrency, with more users and more liquidity, and is used by major institutions.

Sovryn provides the following specific services to users:

-Lending pool: Users can earn interest by lending their tokens to borrowers and margin traders;

-Margin Trading: Users can create long and short trades with leverage of up to 5x.

-Spot Exchange: As an automated market maker (AMM), this platform allows for instant trading between different tokens at low cost and low slippage.

-Fast BTC relay: Users can immediately utilize Bitcoin for smart contracts and other decentralized products using any BTC wallet.