Decentralized finance (DeFi) and Bitcoin (BTC) are two terms that are never actually used together. DeFi is the umbrella term for decentralized financial applications on the blockchain powered by smart contracts. DeFi products run on smart contract networks in which Ethereum (ETH) is the actual home of this world. Using the new technology Ordinals, Bitcoin developer Domo launched a new experimental token standard called ‘BRC-20’ in March. A group of developers now hopes to create an ecosystem for DeFi on Bitcoin’s network as a result.
Uniswap smart contract on Bitcoin
This is about Trustless Market that has succeeded in publishing Uniswap’s smart contracts on the Bitcoin network. The protocol has now delivered daily volumes of $500,000, attracted more than 2,000 users and allows liquidity providers to earn 2 percent on every swap.
The arrival of Ordinals in January has paved the way for non-fungible tokens (NFTs) to be placed on the Bitcoin blockchain. All kinds of data can be attributed to individual satoshis, or the smallest unit of BTC. Text-based inscriptions can be used to create and trade BRC-20 tokens. These tokens on Bitcoin are proving to be very popular as the market capitalization has increased significantly in recent times
One of Trustless Market’s developers, Punk3700, had this to say about the new service:
“We want to make Bitcoin as usable as possible. That means more than just as a digital currency. It’s still super early. It feels a bit like Uniswap in 2018, but it’s a lot of fun.”
Bitcoin DeFi
By now there are already more than 14,000 tokens launched on the Bitcoin network and has a total market capitalization of more than $500 million. The total value of all BRC-20 tokens even surpassed $1 billion earlier this week. However, it is important to mention that most of these tokens are meme coins, rather than tokens that have an actual function.
Despite this, the use of BTC in DeFi applications has so far been limited to tokenized representations of bitcoin on other networks such as Ethereum. For example, Wrapped Bitcoin (WBTC) is an ERC-20 token that gives you access to the DeFi world of Ethereum.
The arrival of Trustless markets is therefore still a nice start for the development of DeFi on Bitcoin.