In addition to wBTC, Stacks, and Rootstock, BadgerDAO, RenVM, and Liquid Network promote various Bitcoin DeFi use cases.
A decentralized autonomous organization (DAO) called BadgerDAO makes it possible for BTC to be used as collateral in various DApps. BadgerDAO uses the Ethereum-based BADGER token for protocol control and incentive distribution.
Users can earn income on their synthetic BTC assets using Sett Vaults, the first product offered by Badger. Users can lock their tokenized Bitcoin in SETTs, which are pools of tokens, and allow smart contracts to manage their assets to produce returns in the form of bTokens.
Badger’s second product, called Digg, is software that controls the elastically supplied cryptocurrency called the DIGG token, pegged to the US dollar price of BTC. Like any other token, DIGG can be deposited in SETT to provide returns to its holders and used in DeFi protocols.
Ethereum’s decentralized protocol, Ren, creates tokens that track the value of non-Ethereum assets, such as Bitcoin, and offers liquidity to projects on various blockchains. That being said, Bitcoin holders can use Ren (needed to pay for nodes) to access Ethereum’s variety of DeFi products without selling their BTC or moving their assets through blockchains.
The Ren virtual machine stores the original funds, accepts tokens from one blockchain, and generates new tokens on another through its RenBridge to exchange assets between blockchains. For example, a user can send BTC to RenVM, which would issue renBTC, a new token on Ethereum that would mirror the original Bitcoin, meaning that when the user wants their Bitcoin back, the transaction can be reversed.
Liquid Network is a Layer 2 Bitcoin solution and inter-exchange settlement network that enables the issuance of digital assets such as security tokens, stablecoins, and other financial instruments privately and quickly on the Bitcoin blockchain.
LBTC, a wrapped version of Bitcoin, serves as the native token on the Liquid sidechain. Users send BTC to a Lightning Network address (a process called a peg-in) on the Bitcoin network to use the Liquid Network. A similar amount of LBTC is minted on the Liquid Network and sent to the user’s address after the transaction has received 102 confirmations.
Additionally, the peg-out to withdraw BTC can be initiated by sending LBTC to record to an unrecoverable address, which, upon receiving two separate confirmations, allows a Lightning Network member to send the original BTC to a user’s Bitcoin network address. .
This post Bitcoin DeFi Ecosystem Explained
was published first on https://cointelegraph.com/explained/bitcoin-defi-ecosystem-explained