Bitcoin Defi | Bitcointalksearch.org

vv181

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Quote from: kiddex on August 15, 2022, 12:07:55 AM

So if i place my bitcoin one of these platforms why do they ask me to convert it to wrapped btc to earn interest or whatever token they offer? How will i earn on bitcoin if it goes up and its converted to wrapped bitcoin? I want to keep my bitcoin bitcoin. i am confused by how this works. My main question probably is why do i have to convert my bitcoin to something else if i just want to earn on my original bitcoin? Doesn't that defeat the purpose of earning on bitcoin?

Since the platform does not exist within the Bitcoin blockchain, it needs to be tokenized/converted into a pegged/supported token of bitcoin. It is required because of how the way defi itself interacts, they can only talk into their own bitcoin token, not the real bitcoin on the Bitcoin blockchain.

The way of the mechanism work is the platform, which, in this case, Sovryn or ALEX can only comprehend the systemized token of the bitcoin, hence, your fund/coin(bitcoin) needs to be converted.

Charles-Tim

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It has well be explained to you, but you can stake tokenized BTC using DeFi protocol just like you wanted, or on centralized exchanges, just like this wBTC staking on Binance https://www.binance.com/en/earn/WBTC.

Note: I do not know about those noncustodial and permissionless smart contract-based system like Sovryn that you mentioned above as I am not into staking.

To know more about staking, you can read this: https://cryptonews.com/exclusives/how-to-stake-wrapped-bitcoin-a-beginners-guide.htm

The coins (although they are tokens actually) are tokenized on ethereum or other blcockchain, they are not actually bitcoin. Bitcoin price do not have to increase before you will earn in percentage from staking.

If bitcoin price decrease, you will still earn in percentage from the staking, but if the amount lost in the downturn is more than the profit from the staking, that means your net profit is at the loss side. Definitely if the price of bitcoin increase you have two profits, first is the passive income that bitcoin price increase, second is the staking profit.

But know that tokenized bitcoin are not actually bitcoin, they are altcoins.

mk4

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Quote from: kiddex on August 15, 2022, 12:07:55 AM

So if i place my bitcoin one of these platforms why do they ask me to convert it to wrapped btc to earn interest or whatever token they offer?

Quote from: kiddex on August 15, 2022, 12:07:55 AM

My main question probably is why do i have to convert my bitcoin to something else if i just want to earn on my original bitcoin? Doesn't that defeat the purpose of earning on bitcoin?

Because you can't have sort of "real" bitcoin(BTC) on "DeFi" platforms on other separate blockchains. It needs to be tokenized.

Quote from: kiddex on August 15, 2022, 12:07:55 AM

How will i earn on bitcoin if it goes up and its converted to wrapped bitcoin?

WBTC tracks the price of BTC, with the risk of you trusting them to honor the peg.

Quote from: kiddex on August 15, 2022, 12:07:55 AM

I want to keep my bitcoin bitcoin. i am confused by how this works.

Then you either use a centralized company(e.g. Coinbase, etc, which I personally don't recommend for obvious reasons), or you simply hold your bitcoin and wait for it to appreciate.

kiddex

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I am trying to figure out how this works forgive me if i am naive to this subject but i am learning anyhow. So yeah with the cefi disasters going on in crypto lately i am looking to towards defi to earn on my bitcoin. But you say bitcoin and defi aren't compatible? Well i found two places that offer just that. A place called Sovryn and a place called Alex. I am familiar with how cefi interest earning works but i am not familiar with defi. So if i place my bitcoin one of these platforms why do they ask me to convert it to wrapped btc to earn interest or whatever token they offer? How will i earn on bitcoin if it goes up and its converted to wrapped bitcoin? I want to keep my bitcoin bitcoin. i am confused by how this works. My main question probably is why do i have to convert my bitcoin to something else if i just want to earn on my original bitcoin? Doesn't that defeat the purpose of earning on bitcoin?

Topic: Bitcoin Defi (Read 75 times)