Worlds collide in Bitcoin-based DeFi project: nothing is impossible

Bitcoin (BTC) has grown from a small project to a leading candidate for a potential global currency thanks to its unrivaled market capitalization, unmatched liquidity pool, and reliable infrastructure. Bitcoin’s long-term benefits have secured its place on the balance sheets of industry giants like Tesla and MicroStrategy, as well as some small nation-states, regardless of market conditions.

No wonder all the big players in the decentralized finance (DeFi) space are yearning to dip into Bitcoin’s massive pool of liquidity. However, since DeFi protocols were built on Ethereum or other blockchains, they lack native compatibility with the Bitcoin network, making it difficult to access BTC liquidity.

Various projects have devised solutions to access Bitcoin liquidity over the years, with the most prominent being wrapped versions of BTC and token bridge. Numerous reports highlighted that token bridges are too vulnerable to act as a DeFi gateway to Bitcoin liquidity, with cross-chain bridges accounting for half of all DeFi exploits.

DeFi in Bitcoin: a complicated task

As DeFi struggles to find an ideal way to access Bitcoin liquidity, BTC holders also want their long-term investment to reach its full potential without introducing additional vulnerabilities or relying on a centralized third party. Even without the Herculean task involved on the technical front, the idea of ​​using the base layer of the Bitcoin blockchain for more than just peer-to-peer funds transfers drew mixed reactions in the Bitcoin community.

Despite the misconception that Bitcoin is limited to simple transactions, the contracts have been published using the Bitcoin script. Users posted the first NFTs, and some even managed to play a retro computer game on the Bitcoin base layer via the Ordinals protocol. Casey Rodarmor, the creator of ordinals, described as a way to “make Bitcoin fun again.”


However, not everyone prefers to use the original blockchain in that way. The Bitcoin OGs did not take the time to weigh in on the matter, pointing out that the base layer is not optimized for uses other than P2P funds transfers. Adam Back, CEO of Blockstream argument in a tweet that unless ordinals were used for something efficient, “it’s another proof of block space consumption.”

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A potential fix should address Bitcoin community concerns about blockchain congestion without introducing new vulnerabilities or relying on third-party custody. A Layer 2 solution rooted in the established Bitcoin blockchain network, Mintlayer aims to provide an acceptable and credible answer to all parties.

Reliable DeFi? Bitcoin fixes this

The founders of Mintlayer designed the protocol to be as interoperable as possible with the Bitcoin base layer. It uses an Unspent Transaction Output (UTXO) ledger system, much like the Bitcoin blockchain, for superior security and robustness. As a Layer 2 solution built on the Bitcoin network, Mintlayer eliminates the need for wrapped tokens or token bridging (the main attack vectors for DeFi hacks) and instead uses atomic swaps for 1:1 transactions from Native BTC to tokens on the Mintlayer blockchain. .

Mintlayer allows Bitcoin holders to access all kinds of DeFi instruments, as well as a vast ecosystem of decentralized applications with their native BTC.

Rather than compete with Bitcoin, Mintlayer aims to empower the original cryptocurrency by providing a robust infrastructure that expands the use of BTC to new horizons. Speaking about building a decentralized protocol to give people new development opportunities, Mintlayer CEO Enrico Rubboli said: “Bitcoin is digital gold, and Mintlayer is built to work with the digital gold standard. We believe that a truly decentralized protocol that is easy to use and highly interoperable with the largest digital liquidity pool is the future of decentralized finance.”

Expanding the reach of Bitcoin

Going into the details of the project, the developers explain that users are not required to hold ML, Mintlayer’s native token, to pay transaction fees. Users can pay for transactions with any token that a block signer accepts. To achieve autonomy, privacy and self-custody, the key pillars of the Bitcoin philosophy, the Mintlayer software is optimized to the point that users will be able to run a full node on an average desktop computer.

In addition to removing the friction around using Bitcoin to conduct a financial transaction, Mintlayer also seeks to make using BTC for non-financial projects within DeFi simple, secure, and seamless. By providing a unifying solution to the highly fragmented state of decentralized finance, Mintlayer encourages developers and users to focus on growing a truly inclusive, fair and transparent financial ecosystem for the benefit of all.

The Token Generation Event (TGE) for Mintlayer’s native ML token is scheduled for March 21, 2023. The testnet launch is expected in Q2 shortly thereafter, followed by the mainnet launch in the third trimester. The recently launched mobile wallet and browser extension for Mintlayer are also available for download.

Learn more about Mintlayer

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