BitFi refers to the development of advanced dApps on the Bitcoin network, utilizing Bitcoin’s security and legacy. The rapid growth and innovation of Decentralized Finance (DeFi) initially centered around the Ethereum (ETH) network. However, as technology evolved, DeFi expanded its reach to the Bitcoin (BTC) network as well.
In this article, we will provide a detailed guide on BitFi in the Bitcoin network. It includes the evolution of BitFi, the integration of decentralized finance with Bitcoin, and the groundbreaking launch of the first Bitcoin-based stablecoin, Stably USD.
With the introduction of the Taproot upgrade, the possibility of creating decentralized applications (dApps) on the Bitcoin blockchain also opened up, accelerating Bitcoin-based DeFi development.
Currently, BitFi is an innovative force enabling the creation of advanced DeFi protocols and apps on the Bitcoin network. Using smart contracts, decentralized protocols, and layer-two scaling solutions, BitFi makes financial activities like lending, borrowing, and trading possible within the Bitcoin ecosystem.
The integration of DeFi with Bitcoin offers users not only security, liquidity, and financial opportunities but also many new advantages. This combines Bitcoin’s stability and global accessibility with DeFi’s innovative features.
The Evolution of BitFi
A few years ago, we couldn’t imagine DeFi being integrated into the Bitcoin network. This integration has now opened up new opportunities and possibilities.
Initially, Bitcoin’s scripting language posed several complex limitations for building DeFi applications. However, with the advancement of smart contract technology and layer-two solutions, BitFi began to develop.
In the beginning, Bitcoin was only considered a decentralized digital currency with limited capacity to run complex financial applications. But with the development of technologies like Taproot and Schnorr signatures, Bitcoin’s scripting capabilities expanded, allowing for the creation of more complex applications.
To enable fast, scalable, and low-cost transactions on the Bitcoin network, the Lightning Network was introduced, which is particularly helpful for DeFi applications.
Today, many new DeFi-based protocols and projects are being developed, mainly inspired by Ethereum’s success in the DeFi space. This success has positively influenced the development of BitFi on Bitcoin. As a result, developers are working to combine Bitcoin’s security and liquidity with DeFi features.
Stablecoin
One of the major achievements in the BitFi ecosystem is the launch of Stably USD, a Bitcoin-based stablecoin, also known as USDSB. It brings stability to the Bitcoin network ecosystem. This USD stablecoin was launched in May 2023, and it sparked interest in financial products.
Behind the creation of Stably USD is a Delaware-based startup called Stably. This stablecoin is pegged 1:1 with the US dollar. What’s interesting is that it is built using Bitcoin’s smallest unit, called ‘satoshi’ or ‘sat’, and represents ownership of dollars held by trusted custodians.
Through this, it became the first stablecoin integrated directly into the native Bitcoin blockchain. Meanwhile, platforms like Rootstock and Sovryn provide Bitcoin-backed stability through secondary layers.
Conclusion
The integration of DeFi with the Bitcoin chain has opened a new door in the crypto market. Many possibilities have emerged. Especially through BitFi, many DeFi functions have become simpler. This new potential has created various opportunities and pathways for the next crypto revolution.
