© Reuters Investing.com – Marcel Harmann, founder and CEO of THORWallet DEX and board member of the Crypto Valley Association, says Bitcoin could become the backbone of DeFi with a more unilateral liquidity pool.
More options for one-way betting on Bitcoin could lead to a consolidation of decentralized exchange pools – meaning improved liquidity for users, which could push the world’s number one digital currency up more than 10,000%.
Marcel Harmann says that Bitcoin has become an integral part of the broader movement because it has attracted the most people to the cryptocurrency world. Perhaps Bitcoin can lead to the next DeFi revolution, returning to cypherpunk culture and opening up new financial opportunities for everyone.
This merger and consolidation could pave the way to unprecedented levels in the future, with many such as Binance founder Cathy Wood, CEO of Arc Investment, and Michael Saylor, CEO of Micro Strategy seeing it as reaching one or two million per token. .
control
It has dominated the decentralized finance (DeFi) scene for many years now, with blockchain serving as the platform of choice for many of the most innovative projects serving their DeFi businesses.
However, recently DeFi projects have started to emerge in many ecosystems challenging Ethereum’s dominance. As we look to a future where the technical interoperability problem is solved, a tough contender for the role of DeFi power player emerges – Bitcoin.
Bitcoin future
In the future, Bitcoin will probably play the most important role in DeFi – not just in the sense of a cap and trade victory. Alternatively, Bitcoin could complete the rest as the cornerstone of multi-chain DeFi.
The key to this is tying everything together so that Bitcoin can seamlessly connect with Ethereum, like iOS and Android today. The argument in favor of aligning Bitcoin with DeFi may come as a surprise. Commentators often pit the existing Bitcoin chain against its more flexible chain. and its functional counterpart, Ethereum.
However, the real “volatility” links DeFi to Bitcoin. Doing so combines the ingenuity of Ethereum with the purity of Bitcoin, giving users the best of both worlds. The debate is about what a Bitcoin-enabled DeFi industry could look like, or whether it will succeed.
The road to the throne
The underlying Proof-of-Work (PoW) consensus mechanism of the Bitcoin network provides a solid foundation for a global payment network independent of any country. The built-in computer collateral is enough to attract institutional money, suggesting it’s good enough for the power players in traditional finance.
Although intended to be the cash of the Internet, Bitcoin’s intrinsic features have inspired networks that require less resources, such as Ethereum.
Despite the arrival of competitors, DeFi is still dominated by local Ethereum projects, which remain a fragmented ecosystem of smart contract-based applications that facilitate an open, peer-to-peer financial system.
Global networks of developers have been working tirelessly to bring this arrangement of decentralized applications (DApps) into line, mostly without success, although atomic exchange has emerged as a viable option.
In general, sub-optimal solutions such as cross-bridges proliferate, making DeFi users vulnerable to exploitation, while other popular solutions such as tokens have a downside, which is centralization.
situation now
To date, DeFi products have not been incorporated into on-chain Bitcoin transactions because the Bitcoin protocol does not facilitate smart contracts. This is the result of Bitcoin’s design, which was created using a limited scripting language to improve security over data storage and programmability.
Thus, Bitcoin is not DeFi-friendly, and for some, guaranteed exposure to non-native chains through tokens like Wrapped Bitcoin (wBTC) is far from the industry’s core ethos.
While this may lead some to believe that interoperability between DeFi and the Bitcoin network is hopeless, there are ways to do it. For many, Bitcoin was the first step in accessing financial services and reimagining what it means to experience financial independence.
throw away the scales
More specifically, enabling unilateral payment for DeFi and Bitcoin will open up new opportunities that could tip the scales in favor of mainstream adoption. Unilateral is significantly safer because it involves depositing into a pool of liquidity rather than a pair of tokens.
Proposing a unilateral return to the Bitcoin-enabled DeFi ecosystem is when things start to get interesting, not just for purists, but for anyone with skin in the game, and it would be a real way to create value without compromising decentralization.
Risk will be taken through a one-way return protocol, meaning users can explore lending and borrowing options that aren’t currently available.
Not suitable now
Thus, Bitcoin is not DeFi-friendly, and for some, guaranteed exposure to non-native chains through tokens like Wrapped Bitcoin (wBTC) is far from the industry’s core ethos.
While this may lead some to believe that interoperability between DeFi and the Bitcoin network is hopeless, there are ways to do it.
For many, Bitcoin was the first step in accessing financial services and reimagining what it means to experience financial independence.
byproduct
A byproduct of this development is likely to be the standardization of decentralized exchange pools (DEX). The saturation of the pools leads to the division of available liquidity, which is associated with an increase in transaction costs. On that note, there are thousands of cryptocurrencies on the market.
This means more assets, more lines, and more layers, and while modularity can be great for specialization, it’s time for the “less is more” backlash.
Building such a seamless and distributed multi-chain financial system is no easy task. It reaches a level of complexity that is hard to imagine, but the impact these alternative financial technologies have had in such a short period of time is incredible.
Standardization can narrow the focus enough that users can increase speed or security without losing access to the rest of blockchain-based finance.
The article does not represent a recommendation or nomination, it simply follows the fluctuations of the market, since trading with digital currencies involves high risks, including the risk of losing part or all of the investment amount, and notes that it is not strictly subject to requirements. bodies and markets.