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Since its inception, the Bitcoin blockchain has undergone several transformations, leading to hard forks and soft forks. Recently, Bitcoin core developers implemented Taproot technical upgrade to increase transaction privacy and efficiency while introducing smart contract functionality on the old blockchain.
Among the benefits offered by this upgrade, Taproot will guarantee significantly reduced transaction fees, which will play a key role in supporting projects that connect Bitcoin to broader DeFi and NFT ecosystems. At the same time, the Taproot upgrade also increases privacy and security, thereby benefiting the entire Bitcoin user community.
Several promising projects are already leveraging these newly added features to this extent, accelerating the growth and adoption of DeFi and NFT on the Bitcoin blockchain. Here are some bitcoin-based projects leading the transition from legacy blockchain 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 implemented the first Bitcoin-secured smart contract platform. To ensure 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.
By merging the best attributes of the Bitcoin and Ethereum networks, RSK positions itself as a highly scalable platform and the first smart contract platform secured by the Bitcoin network. As a result, the RSK infrastructure enables trustless and transparent DeFi opportunities such as 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 easy for dApp developers to migrate their existing dApps to the Bitcoin ecosystem. Recently, the RSK ecosystem reached 72% hash power, cementing its position as the highest performing layer 2 solution on the Bitcoin blockchain.
As for Total Locked Value (TVL), RSK has over $134 million locked on DeFi projects built above. The platform also amassed over 50,000 active users in a short time. Additionally, the RSK ecosystem has settled over 259,000 smart contract transactions to date, further highlighting the growing demand for Bitcoin DeFi.
Besides DeFi, RSK simultaneously facilitates NFT growth on the Bitcoin blockchain. For example, Nifty Labs is currently building an RSK-powered NFT Marketplace, which will allow creators to create their NFTs directly on the Bitcoin blockchain. Users can also trade NFTs for a range of RSK-based tokens and stablecoins, including rBTC, RIF, DOC, RDOC, MOC, and others.
Finally, there is the diverse range of RSK-based stablecoins, backed by Bitcoin (BTC) – the most liquid cryptocurrency. The RSK-based stablecoin project MoneyOnChain offers the stablecoin DollarOnChain (DoC), secured at a 1:1 ratio with BTC. Other platform-specific stablecoins such as the RIF Dollar on Chain (RDOC) of the RIF On Chain DeFi platform and the native XUSD of RSK are pegged 1:1 to the US dollar.
DeFi platform leveraging Bitcoin and Layer 2
Built on the Bitcoin blockchain, Gatea self-hosted wallet and cross-chain Layer 2 DEX, is committed to lowering DeFi’s barriers to entry by facilitating a private and secure environment with the lowest possible fees.
The platform combines the best features of the Bitcoin network and Layer 2 solutions to enable a fully censorship-resistant, trust-minimized, peer-to-peer DeFi ecosystem. Portal uses Fabric, its proprietary Layer 3 peer-to-peer marketplace for compute, to implement ephemeral compute infrastructure using smart contracts on different blockchain platforms and smart contract-based chains.
Due to its design, Portal ensures that cross-chain contracts are moved to Layers 2 and 3, thereby increasing transaction speed and reducing transaction costs. At the same time, it uses the core functionality of Bitcoin to maintain security, privacy, and transparency and the value of BTC to maintain liquidity. Simply put, Portal unlocks the true potential of the Bitcoin network 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 blockchain while maintaining anonymity in open and transparent marketplaces. For example, Portal DEX, the world’s first censorship-resistant layer 2 decentralized cross-chain exchange (DEX), facilitates anonymous and zero-knowledge exchanges. It eliminates the need for bridges to connect to other chains or asset wrappers (BTC to wBTC, etc.) before transferring digital assets from one chain to another.
Enabling Advanced DeFi Applications on Bitcoin
As a decentralized blockchain platform aimed at enabling fast, smart, 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. . Not all transactions on DeFiChain are Turing-complete, making them faster while reducing gas costs and reducing the risk of smart contract errors.
Although built on Bitcoin, DeFiChain uses a hybrid version of the Proof-of-Stake (PoS) and Proof-of-Work (PoW) consensus mechanisms to facilitate transactions and encourage participation in the network. It addresses three critical issues currently clouding the DeFi ecosystem: scalability, security, and decentralization issues.
Users can generate passive returns on their holdings using DeFiChain’s staking, liquidity mining, and dLoans features. By participating in DeFiChain’s consensus mechanism, users can earn up to 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.