Topic: Are you ready to join DeFi on Bitcoin? (Read 284 times)

I think the terms are only relative to help users understand the difference between CeFi (centralized finance, traditional finance with intermediaries such as banks), and DeFi (decentralized finance , intermediaries are just smart contracts). Although most blockchains are becoming more centralized, DeFi is still considered more decentralized than banks. And the term decentralized is also different from the term distributed. I think those who came up with the word "DeFi" also thought to choose the term that best fits the current state.

I like the term OpenFi or DiFi (distributed finance), maybe it will be widely applied in the future, when we gradually abandon CeFi and need a clearer term to distinguish it from DeFi. Clearly, DeFi can reduce the decentralization of the Bitcoin network and reduce the value of BTC. That's why I want to know everyone's opinion on this issue   

I guess I'd say the point of making a clear distinction between something that is very decentralized (bitcoin) with something that has moderate decentralization and in many ways is quite centralized (crypto) is so that the average person has some idea of what they are getting into haha. Loads of people think any random altcoin is decentralized and therefore they think they are "safe" because bitcoin is safe and they don't know the vast differences between bitcoin and crypto. They think it all the same thing, which means people get into very risky things thinking they are safe simply because crypto is associated with Bitcoin.

Just like if you are gonna sign up at a crypto exchange, you would certainly want to know whether it is a really popular and fairly safe exchange, or just some random exchange with hardly any users or track record.


I use the term "Open Finance" because DeFi literally uses blockchains that can be considered quite centralized. So calling it DeFi gives people a false idea of what it actually is. Nothing much decentralized about using apps with random tokens totally owned and sold off by a company for the purpose of making profit. That's not decentralized finance, that's corporate finance (and insanely risky), but since it at least is crypto and not the walled gardens of the finance/banking industry I think it should be as differentiated from traditional finance just as it needs to be differentiated from Bitcoin's decentralization, so Open Finance makes the most sense I think. Not decentralized, not safe, but open and available to anyone unlike traditional finance.

I like this. I've used the word "open" before to describe what I think are the ideals of Bitcoin (and yes, shall we say, crypto).

As I said, I understand why the push for "decentralisation", but I don't comprehend the hasty labeling of it, and by proxy, the disdain for anything that's not "purely" decentralised. I accept the pipe dream, but I also accept the need for a guiding hand in the beginning, and then the concept of that allowing for open directions henceforth. That's how Bitcoin started, did it not? On a closed mailing list, and then on the sole computer, then with other peers, and then its current model (which yes, may have accents of centralisation but not against the idea of open development).

I think anyone already using Bitcoin, signing transactions, accepting Bitcoin, etc. They have no need to ask themselves about "oh, am I ready for defi?". They're already doing better than that!

DeFi has come to refer to bridges more than Blockchains or layers. The bridges that make it possible to exchange different tokens or coins between several blockchains are the basis of what is known as DeFi (although the word de means decentralized,) most hacks come because of these bridges being central and working on the principle of locking coins or minting-and-burning concept.

crypto.com article made a mistake when it compared layer 2 and side-chains and this explains the writer’s lack of distinction between layer 2 and side-chains.


For this reason, we see that side networks such as Rootstock have bridges to Ethereum https://tokenbridge.rsk.co, but this does not exist in the Lightning Network where there is no bridge to EVM Ethereum/SOL Blockchains

I like the term "Open Finance" a lot better than DeFI. Especially "DeFI" as it has existed so far on Ethereum and other altcoins which are far more centralized.

If Open Finance is going to exist anywhere though it makes much more sense for it to exist on Bitcoin rather than a smattering of altcoins. At least existing on Bitcoin the base monetary network it uses is decentralized, even if all the fancy finance operations are done on sidechains and higher layers. But that is where that stuff should be done in the first place because it shouldn't be clogging up the blockchain. I dunno if this stuff will take off, but if it does the best version of Open Finance aka DeFI is going to be done on Bitcoin with side/layered solutions. Crypto finance apps on random altcoins and where every different finance app has a different random token is just plain stupid tbh lol. If these sorts of apps use bitcoin they would at least have a chance to be useful and have staying power.

Thank you very much for this information, I don't really know much about blockchain technology, especially with Layers 1-2-3. Many articles include all sidechains projects in Layer-2 because they are also extension solutions for Layer-1, and I am also familiar with Layer-2 for this purpose.

I also think that DeFi on Bitcoin projects deserve a chance to demonstrate the value they can bring to the community, especially BTC holders. I hope they can generate attractive APRs like DeFi projects on Ethereum or Solana. I myself will also follow the development of DeFi on Bitcoin projects, even though I don't trust them enough to entrust my BTC to them yet.

I will wait for community auditing and testing results before making a decision. Experts in blockchain technology and smart contracts will have better advice for BTC holders.

I support your point of view, bitcoin is the best but our ultimate goal when investing in bitcoin is just profit. So why are we stubbornly ignoring things like altcoins that are giving us good returns? Instead of having to save every dollar to accumulate bitcoin every day, why don't we take advantage of the bull season when altcoin profits will be greater? Then take those profits and invest in our bitcoin portfolio for the long term. There are too many stubborn people who have to miss thousands of great opportunities during the bull season.

For me, I don't idolize any coin, my goal is to make money so my family can have a better life, so I will invest anywhere that can bring me profit. 

Some people are so hooked with Bitcoin that they don't want to see something else does it better, I understand, bitcoin is the best and the original, but defi on bitcoin feels like something that could work.

If you have not tried to atomic swap bitcoin for other coins don't judge, it felt so good and much better, I wonder why we needed big centralized exchanges when these swaps works so damn well.

Nothing is comparable to bitcoin, it's the best, but I will hate myself if I can't give other projects like these Defi projects some chances, to get handful of bitcoin since 2022 I have invested in various projects that have gave me ten times of my money back, which have made me get more Bitcoin in the end.

Those amount would have cost me months of my savings to invest in Bitcoin, so honestly why the hate? I am an opportunist in this financial a d investment world, any defi is welcome for me.

I don't think I'll ever be ready for anything that will congest the bitcoin network, I would definitely love the innovations but at the expense that I've got to pay premium amount of money just to move my transactions isn't something that I've signed up for when I invested in bitcoin but I've tolerated it and now here it is, with all the inscriptions and ordinals that are flooding the network and making the transactions for other people to go slow I don't believe that DeFi is going to be a really big deal to me even if they say that bitcoin's going to go up in prices when this happens, I don't think that I'd take that bargain.

Side-chain and second-layer are fundamentally different. The main difference between the two is the fact that a second layer is built on top of first layer so it depends on that layer for existence. While a side-chain only has a vague link to the other chain but is independent.

In other words a second-layer can not exist without the first layer while a side-chain can continue to exist even if the main chain ceases to exist.
This is why you can create a separate coin with any supply in a side-chain (eg. with a 1:1000 ratio) but you can't do the same in layer 2.

Other things mentioned here such as speed, fee, security, etc. are not characteristics of these two concepts. They are characteristics that can or can not be added to either one depending on the design. For example a layer 2 could be created that is more expensive to use!

I can explain more about this:
Layer-2 soultions will typically provide an off-chain environment to help perform BTC transactions at a higher speed and low fees. Information about the final results of those transactions will be sent to the Bitcoin main-chain, which helps reduce the number of transactions on the main-chain, while more transactions are processed off-chain. Layer-2 helps increase the scalability of the network, while taking advantage of the security and decentralization of the Bitcoin main-chain.

BSC has a token called BTCB. BSC uses the BTC lock mechanism to issue BTCB tokens according to BEP-20 standards. All transactions for BTCB will be similar to other BEP-20 tokens, leveraging the speed and security of BSC and not involving the Bitcoin main-chain.

Why it's always related to making money and risk of being scammed instead of improving Bitcoin? I didn't get it. DeFi is just a centralized project that claimed to be decentralized in order to trick newbies, they thought DeFi is completely decentralized and it's a safe way to earn more money, but unfortunately it isn't.

People who join DeFi are bounty hunters because they don't mind to get scammed.

Bitcoin is the closest thing to realise the definition of DeFi, if you think about it.

Introducing all these different sidechains, drivechains, layer2s and what nots to slowly but surely wrest sole and complete control over your coins, if "DeFi" people think about it, that's really against the definition of decentralised finance.

I get what it stands for, and I don't necessarily dislike these innovations but think for a moment what the majority of DeFi services really are (especially those built for Bitcoin) and you understand that its anything but decentralisation (I hate the term really, but...).

Maybe we should not start to allow what may be of a negative consequence to the network at large on the long run, it all started when the bitcoin network was introduced to ordinals inscriptions, now we can see the more use case for bitcoin having the cost of incurring us with higher transaction fees, now about decentralized finance, we cant totally agree that we may be able to embrace the other side on this as consequence if bitcoin is completely incorporated with defi, though we already have the examples set with the use of bitcoin conversion to monero and the likes using defi but we must look more deeper than present and consider any future consequences as well.

No, and I hate it. I will rather join DeFi on some other chain like Ethereum than Bitcoin. That's not what it's meant for. It's clogging the chain with these stupid cents transactions.
Please take this crap to some other chain and use that. I do not like any Ordinal stuff and DeFi stuff on a blockchain like Bitcoin and I truely believe it doesn't belong here at all.
AND I hope, most of you will agree with me on this take.

I got no problem with DeFI getting built on Bitcoin through higher layers and side chains. Just don't clog up the blockchain. If these things open up new use cases for Bitcoin, and the vast majority of their activity happens on the other layers/chains, only hitting the bitcoin chain occasionally, that's fine.

But I think the main value to Bitcoin would be adding services to the Bitcoin ecosystem, not tokens. Tokens are the mistake people brought to Crypto, as the focus just becomes speculation on get-rich-quick tokens before they bust, rather than on the actual services associated with these things. So building DeFI services on top of Bitcoin to integrate more economic activity into the Bitcoin ecosystem is great. Just don't flood Bitcoin with useless tokens and NFTs and don't clog the limited blockspace with this other activity.


Anything useful being built in the Crypto world should ultimately move to primarily being used on Bitcoin rather than in Crypto, as Bitcoin is the primary thing of value in the entire cryptocurrency world, and is likely the only cryptocurrency that is ever going to go truly mainstream. But there are plenty of things in Crypto that are not actually useful, so I don't want to see people bogging Bitcoin down and degrading its reputation by bringing everything Crypto to Bitcoin. Bitcoin only needs the useful things.

i think it will be very beneficial to a lot of people to store in btc so much potential with it being in demand and still having real world application and utilization


I think it represents the altcoins better than Btc since it was the altcoins that were first incorporated in with the defi projects


defi is certainly a new project that is worth looking at so yes

Storing bitcoin in our wallets, non custodial, open source. Don't store it on centralized exchanges or lock it on DeFi platform to earn yield. Bitcoin itself can help you to earn yield by holding it in your wallet, wait for its bull run and growth.

It is not an evolution for Bitcoin but for altcoins. Developers started it with altcoins and now are trying to do this with Bitcoin because they know Bitcoin has bigger market cap and bigger user base.

No, I don't. Because I don't want to take risk with staking and lose my bitcoins.

Can some body explain to me what is the difference between what OP shares and what Binance did at some point with their Smart Chain bridges where you could hold Smart Chain 'Bitcoin' on their Chain and use a 'bridge' to turn it into the real Bitcoin?

Is it just that they are using this 'Layer 2' word play in order to make it seem more interesting and fresher than a Side Chain?  To me it is the same thing.

Stuff like Rootstock are not layer 2, they are counted as side-chains. Also they are not new, they've been around for a long time and they have not attracted that much attention because they are not hype-based projects and token creation is a scheme that requires hype to survive which means shitplatforms such as ethereum are the choice for token creators to create their useless junk.

This is also not new. For years, centralized systems have been trying to take people's bitcoins and promise giving them profit on the coins they gather. Sometimes it is called "stake" and usually they are scams and almost always they turn into a Ponzi scheme.

There is NO such thing as DeFi on Bitcoin. There are altcoins that try to stick themselves to Bitcoin but have nothing to do with it and there are also side-chains that are not Bitcoin.

Obvious: not your keys, not your coins.

No. The way these "tokens" are defined, they offer nothing new and have no utility in the real world.

No. If I see something pump and dumping on an exchange, I may try to take a quick profit during the pump and sell before the dump begins but that's the only thing I'm interested in.

1. The only way to store your BTC is into your own wallet i.e. non custodial wallet, any other ways to store BTC is scam because you're either trade your real Bitcoin to fake Bitcoin or giving your money to other person/entity.

2. Nah, it's not even a DeFi, but just a bunch of buzzwords.

3. No, that's scam.

All the new innovation they are bringing to the bitcoin network looks odd to me; they are just going to end up congesting the network more, and few people are going to get rich over the ignorance of others. 
 
Even if I want to invest in a few DeFi projects, I will not risk my bitcoin to staking, as that's not part of the reason I chose to invest and hold Bitcoin in the first place.
 
Altcoins have a purpose that they are developed for, and DeFi and others are part of the reason, so I just don't buy the idea of Bitcoin and Defi, and I will be the last person to give the project a try.

1. I think Bitcoin is the ultimate storage of value. And the best, really. Especially when you compare it to traditional stores of value and their past performances as well as their criticisms.

2. DeFi was always part of Bitcoin. It was just limited due to the way Bitcoin works. Although many could argue that the limited part was the lack of DeFi innovations for Bitcoin. I would agree on both statements. It was a bit of both. But that is changing.

3. Oh yes, I am very interested. I atomic swapped Bitcoin for Monero the other day. I realized we need more Bitcoin-compatible altcoins.

A year ago, Bitcoin's use cases primarily focused on store of value and occasional payments, mirroring Satoshi's vision. Even during the 2020 DeFi boom, Bitcoin remained largely uninvolved. Mentioning "Bitcoin DeFi" often conjured images of scams capitalizing on both trends. However, with advancements in technology and the emergence of Layer-2 solutions, Bitcoin is unlocking new possibilities, including DeFi applications. Platforms like Stacks and Rootstock are reintroducing smart contracts, enabling the development of DeFi DApps on Bitcoin^[1].


Bitcoin's total value locked (TVL) has grown to 2.34B USD^[2], surpassing established chains like Polygon, Avalanche, and Optimism, and currently ranks sixth overall^[3]. Additionally, Tron is developing a Layer-2 solution to integrate Bitcoin with its DeFi ecosystem^[4].


Furthermore, Binance Labs recently invested in Babylon, a novel protocol facilitating Bitcoin staking on PoS blockchains. This innovation presents intriguing opportunities for both BTC holders and PoS ecosystems, offering passive income without complex solutions^[5].

As a Bitcoin enthusiast actively implementing DCA, I personally favor storing my BTC in my own wallet. The complexities of DeFi protocols, particularly regarding security, raise concerns. While the potential for sizable profits through DeFi participation during a potential "summer" is undeniable, the risk of entrusting my Bitcoin to fledgling protocols in the face of evolving cyber threats outweighs the potential rewards at this stage.

I would like to know your views on Defi on Bitcoin:

• What are your thoughts on storing BTC?
• Do you believe DeFi represents an evolution for Bitcoin?
• Are you interested in participating in DeFi with your BTC?

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Refenrences:
[1] Bitcoin’s Expanding Ecosystem: Layer-2, DeFi, NFT
[2] DefiLlama: Bitcoin Total Value Locked
[3] DefiLlama: Total Value Locked All Chains
[4] Tron founder unveils Bitcoin layer-2 solution as BTC DeFi breaks $1.2 billion in TVL
[5] Binance Backs a Bitcoin Staking Solution: The Next Big Thing in Crypto?