Becoming a Bitcoiner in the DeFi World

Published on: 14 January, 2022

As the oldest, most valuable, and most secure cryptocurrency, it seems only natural that the DeFi for Bitcoin ecosystem should thrive on a smart contract platform. However, the first financial infrastructure built around Bitcoin consisted of centralized exchanges and custodial payment services. You still had to give up control of your coins to a custodial wallet before you could trade, borrow, lend or transact with them.

Satoshi initially built Bitcoin to be a payment-only protocol. However, a lot has happened since Bitcoin’s inception:

Bitcoin laid the groundwork for a new financial system for peer-to-peer payments.
The RSK Blockchain emerged to offer a platform for building DeFi Apps (Dapps) on a Bitcoin sidechain ecosystem.

With the emergence of DeFi, it became possible to achieve complete financial self-sovereignty. Although there was one major problem: there was still no way to use your bitcoin within the DeFi systems. On this post, we will analyze all the options that RSK provides to become a Bitcoiner a in a DeFi world.

How the Bitcoin ecosystem has expanded into DeFi

Why do we need DeFi?

RSK Performance Breakdown
Hashing Power
Transaction Speed
What about TVL?

DeFi for Bitcoin on RSK
Wallets
Platforms
Stablecoins
Data and analytics
Lending and leveraged trading
Staking
Payments
Marketplaces
Asset Swaps
Bridges
Dev Tooling

The Future of DeFi for Bitcoin on RSK

Why do we need DeFi?

In short, DeFi utilizes blockchain technology to offer several benefits over traditional banking, including:

Total control of your assets.
The transaction is completed quickly and securely.
No geographical restrictions.
Transparency and accountability

DeFi (Decentralized Finance) eliminates the need for third-party middlemen in financial transactions, therefore removing the need for banks. DeFi applications allow you to swap tokens, make payments, lend, borrow and stake savings at your convenience by utilizing blockchain-based smart contracts. DeFi lending protocols offer significantly higher APYs than legacy options.

RSK Performance Breakdown

Hashing Power

RSK employs a parallel hashing algorithm and maintains a merge-mining hashrate of approximately 40%–60% of the total hashrate on the Bitcoin network. However, in April 2021, the platform peaked at above 72% of the Bitcoin network’s hashing power.

When you consider its merged-mining hashing power, which is second only to Bitcoin, you’ll come to realize why RSK is the most secure smart contract platform in the blockchain space.

Transaction Speed

Not only does RSK bring more functionality to Bitcoin users, but it also helps solve the problem of congestion in smart contract networks. DeFi’s reach extends across a number of smart contract platforms, with the vast majority of applications running on the Ethereum Virtual Machine. The overwhelming activity from Ethereum’s DeFi network has resulted in transaction fees skyrocketing to unsustainable levels, over 10x the norm, as a result of the network congestion.

One of the primary benefits of using RBTC is its faster transaction speeds. RSK can scale up to 100 transactions per second without sacrificing decentralization. Meanwhile, RSK’s gas prices remain consistently low, which offers the best workaround to avoid Ethereum’s high gas prices.

What about TVL?

In DeFi, we use the acronym TVL, meaning Total Value Locked. TVL is an index that measures the health of DeFi markets, projects and protocols. With $100+ million USD locked-in to the RSK blockchain, RSK is closely comparable to the Bitcoin Lightning Network.

RSK and Ethereum

The RSK network is a turing-complete RSK Virtual Machine (RVM) for smart-contracts, similar to the Ethereum Virtual Machine (EVM). Although they are not considered direct competitors, RSK is optimized to be faster, more affordable, more scalable and highly compatible with the Ethereum network.

In fact, RSK is compatible with the Ethereum network at multiple layers: the Ethereum Virtual Machine (EVM), the Javascript programming interface (web3), node interprocess connectivity (JSON-RPC) and Ethereum-supported smart-contract programming languages (this includes Solidity, Julia, and new or experimental programming languages like Vyper).

The RSK-Ethereum bridge makes it simple for developers to port their dApps to the RSK Network and seamlessly participate in both the RSK and Ethereum ecosystems. Furthermore, the RVM has specific precompiled contracts that provide the bridging functionality with Bitcoin.

DeFi for Bitcoin on RSK

The DeFi for Bitcoin ecosystem on RSK comprises a wide set of unique DeFi projects. The following are the project categories with real-world examples currently running on RSK:

Wallets
Asset Management
Platforms
Analytics
Lending and borrowing
Staking
Margin Trading
Payments
Bridges
Marketplaces
Dev Tooling

Wallets

MathWallet

Math Wallet is a cryptocurrency wallet that is utilized by over a million users, 50+ blockchains, 2000+ dApps, and 200+ decentralized applications. Based on the 2 million+ MathWallet users, MathChain is a substrate-based modular blockchain.

Similar to RSK, MathChain’s focus is on smart wallets, mass adoption, and go-to-market blockchain applications. It is a decentralized, permissionless protocol that bridges the web 3.0 and web 2.0 worlds.

Beexo Private Chat and Wallet

Since 2018, Beexo’s objective has been to bring blockchain technology closer to users through a simple user interface and a good user experience. Beexo is a safe and private communication tool, as well as a non-custodial DeFi wallet. The Beexo wallet is the first to use RIF Enveloping, a technology that aims to replicate the payment experience offered by traditional banking.

Liquality Wallet

The Liquality Wallet is a MetaMask alternative, offering one of the most straightforward methods for storing and atomically swapping crypto across several blockchains. The Liquality Wallet enables you to access dapps using BTC, RBTC, and ETH interchangeably, via built-in one-click atomic swaps.

Edge Wallet

Edge is a robust and user-friendly cryptocurrency wallet that enables users to simply manage their own private keys while maintaining the familiarity and comfort of mobile banking. Edge offers enhanced security while remaining simple and easy to use. Neither Edge nor any third-party service provider has access to your wallet, funds, or personal data. You gain the financial privacy and liberty for which blockchain was created.

Defiant

Defiant is the first mobile wallet and peer-to-peer marketplace for stablecoins. They provide a mechanism for transactions between Bitcoin, Ethereum and RSK ecosystems.

Platforms

RIF Services

Bitcoin laid the groundwork for the future financial system. RSK enhanced the potential of Bitcoin by making it fully programmable via smart contracts. RIF brings convenience to the RSK sidechain, offering a layer of solutions for identities, storage, communications, marketplaces, micropayments and gateways to enable the development of decentralized sharing economies.

The RIF Token allows developers to access the suite of convenience-based RIF services, including but not limited to the following:

The RIF Naming Service: a distributed service that provides users with a readable domain or alias. It can also be used to give a memorable digital name to other resources, such as payment or communication addresses.
RIF Lumino Network: a third-layer solution for the Bitcoin blockchain that provides state channels for all tokens based on RSK, significantly boosting transaction throughput and lowering transaction costs.
RIF Gateways: provides tools and solutions that enable decentralized programs to communicate with the outside world in an unobtrusive manner.

Gitcoin

Utilize the multi-network APIs provided by the Gitcoin cloud architecture to swiftly connect to nodes and customize your wallet to satisfy all of your identity and transaction requirements. By using your Nifty wallet to communicate with Gitcoin via RSK, you can spend RBTC, DOC, and RDOC to post bounties and grants on the Gitcoin platform.

Taringa

Taringa is a Spanish-language social network that resembles a cross between Reddit and Facebook. It is particularly popular in Argentina, Spain, Colombia, Chile, and Peru, as well as the Spanish-speaking community in the United States, and it is Argentina’s second-most popular social network, trailing only Facebook.

The producers of RSK, IOVlabs, acquired Taringa! In 2019, with plans to tokenize interactions on the social network in the future.

Extrimian

Extrimian is a platform for incorporating blockchain technology easily into your business solution. Thus, businesses and governments may save time and money by focusing on the core value of their dApp innovations and bringing efficiencies in app development and infrastructure operations.

The RSK Enterprise Cloud, a RIFOS based Blockchain-as-a-Service platform, will enable Extrimian to design their own dApps and easily set up, manage and connect to the organization’s internal network via RSK’s DeFi for Bitcoin ecosystem.

Stablecoins

Rootstock Bitcoin (RBTC)

RBTC is used in the RSK ecosystem as gas to pay for the execution of smart contracts in the same way as ETH is used as gas on Ethereum. Although RSK smart contracts are not deployed directly to the Bitcoin blockchain, you can use your bitcoin directly in RSK’s DeFi ecosystem via the 2-way PowPeg protocol. This involves pegging the Rootoshi (the smallest unit of RBTC) 1:1 to the Satoshi (the smallest unit of BTC). Any transferred BTCs are pegged in Bitcoin, and the same amount in RBTC is pegged out. The transaction works vice-versa for pegging out.

Money On Chain (MOC) Network

Money On Chain is a set of stablecoin smart contracts. Within the Money On Chain architecture, there are four major tokens within the Money On Chain ecosystem. We’ll briefly touch on each token’s primary use case:

Dollar On Chain (DoC) is a stablecoin that is backed by Bitcoin and is pegged to the US dollar. DOC enables users to easily minimize the volatility risks that come with holding bitcoins.
BitPro (BPRO) is a passive income token for hodlers, that absorbs the USD-BTC rate fluctuations.
BTCX is a leveraged Bitcoin investment instrument, borrowing value from BitPro and DoC holders, with a daily interest rate being paid to the former.
Money On Chain (MOC) is the native token for the Money On Chain protocol. Money On Chain tokens can be earned by running MOC nodes and as incentives for hoarding BPRO tokens.

BRZ Token

Brazilian Digital Token (BRZ) has adopted the RSK blockchain in order to support Ethereum smart contracts and by implication, decentralized financial institutions (DeFi).

In addition to the stablecoins listed above, RSK supports:

USDT
DAI
xUSD

Here’s a full list of stablecoins on Bitcoin thanks to RSK.

Data and analytics

Tenderly

Tenderly is an excellent set of tools for debugging smart contracts on RSK. Tenderly enables developers to:

Explore, filter, and search for transactions and contract interactions.
Debug individual transactions with “step through” functionality.
Analyze what part of a transaction/contract uses how much gas in detail.
Create your own RSK fork that works with mainnet data to use as your own testnet.
Connect to local nodes to only analyze transactions on that node.
Create your own custom analytics dashboard to visualize and analyze RSK blockchain data.
Set up custom alerts based on many factors.

Chainbeat

Chainbeat provides blockchain data insights to aid in the understanding of smart contract usage and behavioral indicators for RSK-based smart contracts. Using Chainbeat, you can:

Access key developer insights like transactions, users, gas usage, and errors.
Use proactive alerts to help with app development.
Benchmark application usage data with other projects in another blockchain ecosystem (such as Ethereum) using our Report Studio.
Offline data access for advanced business analytics
Simple setup with no need for any additional software installation.
Support for wallets to stay on top of everything.

Ciphertrace

Analytics and compliance are driving the widespread adoption of blockchain.

Covalent

It provides a unified API, bringing visibility to billions of blockchain data points.

Lending and Leveraged Trading

Sovryn

Sovryn is a smart contract that is permissionless and based on the RSK sidechain. This protocol is designed to allow for Bitcoin lending, marginal trading and borrowing. There is an origination fee applied to every loan that is set at 0.09%.

Tropykus Finance

RSK Tropykus is a non-custodial, non-KYC lending and borrowing platform with a primary focus on South America. Users can earn bitcoin by providing liquidity for over-collateralized loans to Latin American residents.

Other lending and leverage trading dapps in the RSK ecosystem include:

Bitcoin Pro,
Bitcoin X
RIF 2X
RIF Pro
Decrypto
Xcapit

Staking

BabelFish

BabelFish’s mind-boggling objective is to aggregate stablecoins, enhance multi-chain flow and accelerate hyper-bitcoinization.

Other staking dapps in the RSK ecosystem include:

Money On Chain (MOC)
RIF On Chain (ROC)
Bundles finance

Payments

BleumiPay

Bleumi Pay helps businesses concentrate on growth while addressing all of their payment demands in an ever-changing landscape. BleumiPay enables RSK payments with no transaction fees.

Marketplaces

Kripton

Kripton interfaces with RSK to provide an on/off ramp solution that enables users in Latin American nations to gain access to the RSK network’s coins and tokens using their local currencies.

Asset Swaps

RSKSwap

RSKSwap is a fork of the Uniswap V2 Protocol, the most widely used decentralized exchange on the Ethereum network. The protocol is based on mathematical algorithms that calculate and establish the prices of various tokens. This allows the user to instantly exchange ERC-20 tokens.

As is the case with the majority of DeFi protocols, the project has a number of advantages. Among the most significant are the absence of a central authority with central control and the system’s security and permissionlessness.

Bridges

PowPeg

RBTC is the next-generation bitcoin-pegged stablecoin, as it brings a novel layer of security to the blockchain environment. The RSK Federation pioneers the use of two-way pegs by utilizing specialized Hardware Security Modules (HSM) to protect permissionless swaps between BTC and RBTC. While this is happening, the BTC-RBTC merging miners ensure uniform block consensus.

Technical users can access RBTC in a decentralized way by converting to and from BTC over the Bitcoin-RSK bridge. Less technically savvy individuals can obtain RBTC through exchanges.

RSK Token Bridges

The functioning of the Token Bridge is highly unusual yet intuitive. The ratio of tokens transferred via the network is always 1:1. When the original tokens are transferred to the other network, the Token Bridge smart contract secures the original tokens. Side tokens are minted and assigned to the same address as the bridge’s original address.

When side tokens are returned from the other network, they are burned. Original tokens are unlocked in the Token Bridge smart contract and transferred to the same address that called the bridge contract originally.

Dev Tooling

RIF Services

Built on top of RSK, RIF aims to create the building blocks to construct a fully decentralized internet in order to enable centralized sharing economies in order to empower and protect the value of individuals through identity, payments, storage, communications, gateway services, and the marketplace.

All RIF services are designed to facilitate the interaction of the global community of developers with blockchain technology.

D’Cent

The D’CENT Wallet is a new breed of ultra-convenient, biometric-enabled cold storage technology that puts the administration of valuable digital assets literally at your fingertips. Unlock UNLIMITED crypto and crypto-backed, trading pairs for enhanced experience for both experienced and novice traders.

The Future of DeFi for Bitcoin on RSK

Decentralization is the future of finance and the Internet, and Bitcoin is the most secure and widely embraced blockchain platform for implementing it. As bitcoin (BTC) gains popular acceptance globally, RSK opens up a new vista of DeFi potential on the Bitcoin network, empowering users and developers to use the network’s scalability, efficiency and cost-effectiveness.