Bitcoin DeFi Development: Insights from Developers

The landscape of Bitcoin DeFi presents unique challenges for developers, with issues surrounding base yield and fragmented liquidity serving as key obstacles. Here are some insights shared by experts in the field:

• The lack of base yield and fragmented liquidity hinder Bitcoin DeFi growth
• SolvBTC introduces Liquid Yield Tokens to enable earning income from DeFi
• Master Yield Market consolidates yield-bearing assets within the Bitcoin ecosystem
• MetaID offers solutions to address congestion and high fees in Bitcoin DeFi

One developer, Ryan Chow of SolvBTC, highlights the importance of addressing the lack of base yield and liquidity fragmentation in Bitcoin DeFi. He emphasizes the need for solutions that allow Bitcoin to actively participate in the DeFi ecosystem, leading to the development of Liquid Yield Tokens.

SolvBTC’s Ethena Vault is a prime example of how Bitcoin users can leverage their assets to earn income through stable base yield and additional earning opportunities provided by the platform. The Vault enables users to borrow stablecoins using Bitcoin collateral, mint and stake Ethena’s USDe, and capture yield from funding rates through delta hedging derivatives positions.

Another promising development in the Bitcoin DeFi space is Master Yield Market, a protocol that aggregates yield-bearing assets within the Bitcoin ecosystem. This protocol allows users to directly purchase Bitcoin yield assets from blockchain-native DeFi protocols using various cryptocurrencies such as Tether, Ethereum, and wrapped Bitcoin.

MetaID, a core developer, addresses congestion and high fees in Bitcoin by introducing Unified UTXO Chain and Unified Bitcoin Address concepts, enabling seamless support for Layer 2 networks that are compatible with Bitcoin. Despite Bitcoin’s limitations in smart contracts, developers recognize its potential as the best carrier for Web3 applications due to its consensus, decentralization, security, and on-chain data storage capabilities.