In recent years, stablecoins have become very popular throughout the crypto universe due to their inherent feature that protects investors from the volatility of the crypto market. They are used for various use cases and exist on different blockchain platforms.
Until recently, stablecoins, decentralized finance (DeFi), non-fungible tokens (NFTs), and other similar primitives powered by smart contracts were not available on the Bitcoin network. However, with the emergence of RSK, the first smart contract platform secured by the Bitcoin network, Bitcoin enthusiasts can now access unlimited DeFi opportunities, including stablecoins, without the need to switch to another blockchain.
Bitcoin (BTC) is currently considered the most liquid cryptocurrency in existence. It already has the largest market capitalization and the largest user community. Accordingly, by using BTC as collateral, stablecoins can take advantage of the inherent characteristics of the Bitcoin blockchain, which include decentralization, censorship resistance, immutability, and unparalleled security. Additionally, with BTC as collateral, the counterparty risks associated with stablecoins can also be minimized to some extent.
RSK: a Goliath in the making
RSK is one of the platforms leveling the playing field for bitcoin enthusiasts as open finance (OpFi) continues to grow. There was a significant increase in the number of users joining RSK’s smart contract ecosystem in 2021, increasing the amount of BTC pegged to RSK from 546 to 2,520 – a promising development considering that DeFi in is still in its infancy on the Bitcoin blockchain.
To further expand its range of DeFi services, RSK has also launched an interoperability bridge with Ethereum, enabling two-way transfer of any token between the RSK and Ethereum ecosystems. As a result, Ethereum users can transact seamlessly with rBTC, thereby gaining indirect exposure to the Bitcoin DeFi ecosystem. This bridge will also work in favor of RSK users, especially those using Ethereum-based stablecoins such as DAI.
The Bitcoin DeFi movement is seen as the next big step forward for DeFi 2.0. Against this backdrop, RSK, with its suite of stablecoins and DeFi products, coupled with the proven security and liquidity of the Bitcoin network, has positioned itself as the go-to solution for developers looking for alternatives to growing problems. of Ethereum.
Technically, RSK offers full EVM (Ethereum Virtual Machine) compatibility, which means developers can seamlessly transfer their Solidity-based dApps (decentralized applications) to Bitcoin without making significant changes to the underlying code. Two-way peg with Bitcoin allows developers to take advantage of the features of both RSK and Bitcoin networks.
When it comes to scalability, Ethereum typically offers a throughput of 30 TPS (transactions per second), which can increase depending on network congestion. At the same time, RSK delivers up to 100 TPS without reducing storage space or compromising decentralization. Similarly, in terms of gas fees, RSK charges up to 42x less than the average Ethereum gas fees.
In terms of security, most blockchain networks that follow the PoS (Proof-of-Stake) consensus mechanism are prone to cyberattacks, as evidenced by the recent spate of hacks on DeFi platforms. On the other hand, the Bitcoin network ranks among the most secure because the support of the Bitcoin network implies that a party controls at least 51% of the hash rate. This is considered increasingly difficult as the hashrate continues to increase. RSK is secured by approximately 50% of the Bitcoin network’s total hashrate, making it the most secure smart contract platform in terms of defending against 51% attacks.
Highlighting the benefits of using BTC-pegged stablecoins, Diego Gutierrez Zaldivar, co-founder of RSK and CEO of IOVlabs, explains, “Bitcoin is the most liquid crypto asset, and it is recognized as a store of value. Therefore, I guess it is the best form of collateral you can use in DeFi protocols. If you are using a stablecoin such than USDT, you are exposed to third-party risk.
The strength of RSK lies in a combination of features that we can potentially achieve: optimal security, high decentralization, high scalability and low cost. »
So far, the RSK ecosystem has amassed a TVL (Total Value Locked) of over $134 million, hosting some of the most successful stablecoin projects like MoneyOnChain (MOC), Sovryn, and BabelFish, among others.
The Dollar on Chain (DoC) stablecoin is one of the main assets offered by MoneyOnChain. It is collateralized at a 1:1 ratio with BTC, positioning it among the best collateral since the liquidity of BTC backs it. Then there is the RIF Dollar on Chain (RDOC), one of the main assets offered by the RIF On Chain DeFi platform. RDOC uses the RIF token as collateral and is pegged at a 1:1 ratio with the US dollar.
The RSK ecosystem is also home to XUSD, the USD-pegged stablecoin of cross-chain protocol BabelFish. The XUSD stablecoin is used as a decentralized aggregator and distributor of multiple stablecoins and can be traded or traded at a 1:1 ratio with any other stablecoin, as guaranteed by the underlying smart contract.
With RSK’s rDAI stablecoin emerging as an alternative to Ethereum’s high transaction fees, you can convert DAI for much lower gas fees (around 15 cents per transaction), making it around 80 times cheaper than the DAI transaction on the Ethereum network. Besides these features, the RSK ecosystem is also home to the stablecoin BRZ, which is pegged 1:1 with the Brazilian Real (BRL).
In addition to this, Blindex, a multi-currency stablecoin DeFi platform, also deploys a wide range of stablecoins tied to individual assets using RSK smart contracts. Commonly referred to as BD-Stables, these stablecoins are pegged 1:1 to the underlying currency. For example, if a BD-Stable is pegged to USD, it is represented by bUSD. For the Australian dollar, it’s bAUD, bEUR for the euro, bJPY for the Japanese yen, etc.
Thanks to emerging technologies, the DeFi ecosystem has undergone several transformations over the past couple of years. Stablecoins, as one of the strongest pillars of the crypto market, will play a vital role in the ongoing transition to DeFi 2.0, especially now that they have finally found their way into the Bitcoin ecosystem, thanks RSK’s smart contract capabilities.