DeFi is blockchain’s first killer app, with assets locked up now approaching $1 billion USD. But one major asset is missing: Bitcoin.
Bitcoin is not only the first crypto asset, but the largest - with over $168 billion USD of Bitcoin in circulation it has deep pools of liquidity. It is one of the least volatile cryptocurrencies and has a large network of fiat on and off ramps. All these properties make it a great crypto-collateral.
We think Bitcoin has the potential to transform the DeFi landscape as the most widespread and liquid asset available today. Smart contract capabilties also enable Bitcoin holders to access new services such as trustless exchange and lending. That’s why we’re excited to be helping secure some of the top projects that are working to bring Bitcoin to the DeFi ecosystem: Rootstock, Echo, Atomic Loans, Hashflow, and Kava.
RSK is the second layer, smart-contract protocol for Bitcoin. It adds additional functionality to bitcoin, allowing for a whole range of more creative and sophisticated use cases to be built for Bitcoin in a decentralized manner.
RSK works as a Bitcoin Sidechain. When Bitcoins are transferred into the RSK blockchain, they become “SmartBitcoins” (SBTC). SmartBitcoins are equivalent to bitcoins living in the RSK blockchain, and they can be transferred back to Bitcoins at any time.
RSK enhances Bitcoin in the following areas:
- Turing-complete RSK Virtual Machine (RVM) allowing smart-contracts
- Average first confirmation of transactions in 10 seconds
- Safe merged mining which comines PoW with backup threshold-signature based
- Federation mining
- Two-way pegging using sidechains
Echo is another approach to running decentralized applications that interact with the Bitcoin network. It uses a pegged sidechain which uses its own “Proof of Weighted Randomness” consensus model designed to minimize the trust required in the network. Its smart contracts can be written in a variety of languages: C++, Solidity, Rust, and more.
Atomic Loans is developing a cross-chain protocol for non-custodial Bitcoin-backed loans. Users can borrow Ethereum-based USD stablecoins while locking Bitcoin as collateral natively on the Bitcoin chain. In case of default, the collateral is liquidated to make the lender whole.
By extending atomic swap technology, Atomic Loans uses the native functionality of Bitcoin and Ethereum to allow for peer to peer lending to occur without centralized custodians.
Kava is developing the first DeFi platform offering collateralized loans using BTC, ATOM, XRP and BNB as collateral. It aims to be a cross-chain version of the MakerDAO vault system.
Users can leverage Kava to provide themselves with self-issued loans without the need of a credit score or counter party. When users collateralize digital assets on Kava, they receive the loan in USDX, a collateral-backed stablecoin pegged to the US dollar which can be used to leverage their exposure to cryptocurrencies.
As a cross-chain platform, Kava has the potential to bring BTC and other digital assets to the DeFi ecosystem. Kava launched their mainnet on November 14th, 2019.
Securing DeFi with Quantstamp
Currently, over 1 billion USD worth of cryptocurrency is locked in DeFi smart contracts, but smart contracts are not bulletproof. In 2017, over a quarter billion USD worth of cryptocurrency was lost or stolen due to vulnerabilities in smart contracts.
Decentralized finance has the potential to enhance economic activity worldwide, but if projects do not incorporate expert security services into their development workflow, users will be hesitant to use those applications.
Quantstamp serves the DeFi ecosystem by protecting the value held within DeFi applications. Its expert auditors have experience securing nearly 100 projects that encompass everything from stablecoins to decentralized oracles. The total value secured by Quantstamp’s security services amounts to over 1 billion USD.