[BTCFi #1] Introducing the next chapter in Bitcoin
2024 is shaping up to be an exciting year for Bitcoin, and things are getting even more heated now with Bitcoin ETF officially announced. In the midst of the ongoing Bitcoin boom and the evolution of the blockchain and cryptocurrency space, a crucial piece has been missing for Bitcoin holders — a secure and decentralized native staking option.
While innovators such as Stacks, Rootstock, Lightning Network and more are creating a vibrant ecosystem around the native Bitcoin, we’ve yet to see native Bitcoin staking, or a service that would provide Bitcoin holders with opportunities for source of revenue.
Despite the surge in interest and innovation in using Bitcoin, attempts to introduce centralized staking solutions have been fraught with risks, as exemplified by the challenges faced by Celsius and other centralized services. Enter BTCFi — a revolutionary financial product designed to fill this void by offering Bitcoin holders a decentralized source of revenue while maintaining complete control over their BTC balance.
BTCFi: Empowering Bitcoin Holders with Decentralized Revenue Generation
BTCFi distinguishes itself by providing a decentralized and secure revenue generating solution, differentiating from centralized counterparts that have proven risky in recent times. As Bitcoin is a PoW system, there is no native staking, but BTCFi acts as an alternative solution to this problem.
BTCFi offers Bitcoin holders an opportunity to earn passive income with minimized risk, while being user-friendly, fast, and completely self-custodial.
Key Features
Fully Decentralized Bitcoin DeFi
BTCFi operates on a decentralized protocol, eliminating the need for intermediaries or third-party custodians. This ensures that the process is transparent, secure, and controlled by smart contracts, putting the power back in the hands of the users.
Native Bitcoin Usage
Unlike BRC-20 tokens that imitate ERC-20 standards on the Bitcoin network, BTCFi aims to allow users to utilize their actual Bitcoin holdings. This preserves the decentralized nature of Bitcoin while enabling users to earn additional revenue through a fair and transparent reward mechanism. The initial version of BTCFi will ship without this capability; however, implementation of native BTC remains high on our list of priorities.
Minimal Risk
In contrast to centralized efforts like Celsius, BTCFi minimizes risks by removing single points of failure and reliance on external entities. The decentralized nature of the protocol enhances security, mitigating potential risks associated with centralized staking platforms.
Fast and Self-Custodial
BTCFi is designed with speed and efficiency at core, allowing users to stake their Bitcoin quickly and seamlessly. And thanks to the high transactional rate of Bifrost Network, which BTCFi will launch on, execution of various functions of BTCFi will be faster and cheaper than that of its competitors on other networks. Additionally, the self-custodial nature of the platform ensures that users have complete control over their BTC holdings, with no centralized agency in any part of user interaction. This self-custodial approach ensures that users can engage in utilizing without compromising their ownership and control over their Bitcoin.
Crosschain Interoperability
The goal of this project is not limited to the utilization of BTC and BtcUSD within the Bifrost ecosystem. To create a positive flywheel ecosystem, liquidity should also be easily accessible on other blockchains outside the ecosystem. BTCFi, as is with all Bifrost-related protocols, is powered by Bifrost’s proprietary cross-chain system capable of providing liquidity access to and from all major chains. BTCFi can provide connectivity to protocols that require the use of Native BTC and can also utilize wrapped forms of BTC from other blockchains. This crosschain interoperability is what makes BtcUSD all the more useful as well, as users can utilize this asset across different ecosystems to generate yield.
Architecture
At the heart of this protocol is BtcUSD, an over-collateralized stablecoin backed by BTC. This is our answer to the growing needs for Bitcoin-backed stablecoin, and to problems suffered by various other crypto-collateralized stablecoins.
BtcUSD is safer to hold than any other crypto-backed stablecoin much in part thanks to Bitcoin collateralization. Bitcoin is less susceptible to market fluctuation than any other crypto assets, and this means while BtcUSD is in use, the peg remains strong.
The reasoning behind this design is simple; BtcUSD allows its users to create stable yield that minimizes risk, through a variety of methods that is enabled by Bifrost’s cross-chain capabilities, as well as ones that do not require it. This effectively allows BTC holders to generate revenue using their BTC, which normally is not possible with native BTC.
In order to support native BTC integration into BTCFi, we will be using fraud proof to verify the actions of relayers, a method employed by many Optimistic Rollup L2s on Ethereum. We are in the process of porting our native BTC bridge from Ethereum to Bifrost Network.
Roadmap
Conclusion
BTCFi is the spiritual successor to our service that launched two years ago, BiFi(link). BiFi was one of the first product to connect native Bitcoin to Ethereum, and since then, Bifrost Network and its services have come a long way that allows BTCFi to be superior to BiFi in almost every way possible, in terms of infrastructural architecture and usability.
What is different, however, is the unique structure offered by BTCFi. The game-changer here is BtcUSD, the key to utilizing EVM DeFi protocols, giving users multiple lossless way of generating revenue. While there already exists several ways this can be achieved, we intend on introducing more ways to utilize BtcUSD in the coming days, so that users may maximize their asset utilization.
BTCFi starts and ends with Bitcoin, as we have firm belief that Bitcoin is the most valuable asset to hold, and most ideal to be used for collateral. As firm believers of Bitcoin ourselves, we wish to empower Bitcoin hodlers with DeFi capabilities, so they can maintain their holdings and reap DeFi benefits.
We will be launching BTCFi website in the coming days, with exciting launch events in plans. Please keep an eye out, and we’ll see you on the Bitcoin side soon.
