It appears that all of the major companies in the DeFi market are eager to dip their toes into Bitcoin’s enormous liquidity pool. DeFi protocols lack native compatibility with the Bitcoin network because they were developed on Ethereum or other blockchains, which makes it more challenging to access the BTC liquidity.
Throughout the years, a number of initiatives have developed workarounds to access Bitcoin liquidity; to my view, these include things like wrapped copies of BTC and token bridges. Token bridges are too vulnerable to serve as DeFi’s gateway to Bitcoin liquidity, according to many studies, with cross-chain bridges being responsible for half of all DeFi attacks.
DeFi experienced some nasty events last week, but I’m curious about what BTC could be able to accomplish in this area. I might just stick with Flynt Finance because the last time I had an experience there that 1 BTC became 1.2 BTC in like 6 months.
BTC owners want their long-term investment to realize its full potential without introducing additional weaknesses or depending on a centralized third party, just as DeFi seeks to discover the best means to access Bitcoin liquidity.
The idea of using the basic layer of the Bitcoin blockchain for anything other than peer-to-peer fund transactions sparked conflicting emotions from the Bitcoin community, even without the mammoth undertaking involved on the technical front.
What do you think of it? Do you anticipate that Bitcoin’s reach will grow in the future?