Yala Recap: Bitcoin Renaissance: X-Spaces
What role can Bitcoin play in scaling DeFi ecosystems? On June 13th, Our Co-Founder and COO, Kaitai (KT) Chang attended Bitcoin Renaissance Twitter Space hosted by Babylon, and explored how Bitcoin can enhance the security and scalability of DeFi platforms, fostering greater innovation and adoption.
Below are a summary of the highlights:
Yala’s Story
Yala, co-founded in November 2023, aims to leverage the untapped liquidity in the Bitcoin ecosystem, enabling users to utilize their BTC without bridging or wrapping and earn APY across the ecosystem.
Challenges in Integrating Bitcoin into DeFi
KT highlighted two main challenges: technical limitations and user onboarding. On the technical side, Bitcoin lacks native smart contract capabilities, and storing BTC natively remains a hurdle. Onboarding users is challenging due to complex wallet choices, high transaction fees, and fragmented liquidity leading to bad user experience. Yala aims to solve these issues by enabling seamless BTC usage in DeFi.
Leveraging Bitcoin’s Scripting Capabilities to Support DeFi
KT discussed extending Bitcoin’s limited scripting capabilities for DeFi. Yala’s platform allows BTC staking through custodians and decentralized storage, issuing a stablecoin $YU to be used across the ecosystem. The protocol supports the inscriptions or Runes protocol, settling directly on BTC, and supports innovative features like unlimited stablecoin minting and burning.
Pros and Cons of Using Bitcoin as Collateral
KT emphasized Bitcoin’s security with its PoW consensus and its status as a major digital asset. However, volatility and technical complexity are drawbacks. Limited block space and high latency also pose challenges. Yala addresses these issues by overcollateralizing BTC and minting stablecoins on destination chains without wrapping or bridging, eliminating the latency bottleneck as the latency would be that on the destination chain.
Combining Bitcoin’s Security with Ethereum’s Flexibility
KT explained how BTC can be integrated with EVMs and x-VMs. Building reliable oracles and data feeds compatible with BTC is crucial. Moreover Yala will leverage its partner solution for the decentralized storage, the Spiderchain, that leverages a network of MPCs and validators taken randomly from a pool of validators to enhance security and reduce centralization risks.
Bitcoin Enthusiasts vs. DeFi Native Users
Bitcoin enthusiasts, often conservative, are hesitant about DeFi because of the underlying tech issues and dislike for holding multiple tokens. Yala’s approach targets this demographic by addressing their concerns and providing a seamless experience without wrapping or bridging.
Improving UX for Bitcoin DeFi
Yala adopted a dual approach for UX, similar to centralized exchanges, catering to both newcomers and experienced users. The simplified interface, Lite mode, caters beginners, while the advanced interface, the Pro mode, with options for experienced users can attract a broader audience. Institutions and BTC whales, often conservative, could be convinced by a seamless user experience.
Scalability and Potential Impact
Scalability is vital for growing the market, attracting conservative users and institutions. Yala’s focus on providing liquidity to targeted DeFi protocols can create a virtuous cycle, enhancing user experience and generating revenue for further protocol development. KT also highlighted the importance of community support in driving scalability.
Partnership with Babylon
Yala partnered with Babyblon about three months ago. KT mentioned Yala’s mission to enable BTC holders to earn yields across the ecosystem. With this partnership, it allows BTC holders to earn yields from staking on DeFi protocols and restaking on Babylon. This dual-yield approach offers flexibility and higher APYs, catering to different risk profiles.
Tune in to hear the full Twitter Space: https://x.com/i/spaces/1zqKVqPRApnxB
About Yala
Yala connects Bitcoin liquidity with a meta yield stablecoin. Designed as both a potent asset and a liquidity enhancer, the stablecoin, YU, operates across various ecosystems, increasing efficiency without the need for bridges or relocating the underlying Bitcoin. Yala empowers Bitcoin holders and ecosystem participants with expanded utility, all while maintaining the security of Bitcoin’s infrastructure.
