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Bitcoin, which was launched in 2009 as an inflation hedge, has gained popularity since then. Some countries like El Salvador even made it a legal tender. Market valuation for BTC circulating supply in March 2024 reached The 8th-most valuable global property is worth $1.4 trillion. This surpasses silver by $1.4 billion.
BTC is still a dominant cryptocurrency, but the majority of BTC remains in wallets. BTC’s large liquidity reserves remain underutilized, and are unproductive because of the limited network scalability. Bitcoin also doesn’t have programmable intelligent contracts, and the block timeout is only 10 minutes. The challenges impede developer activity, slow growth and stop the development of Bitcoin-based decentralized financial services.
Bitcoin: The history of its origins
Defi apps were not available on Bitcoin, which prevented users from leveraging the huge reserves of BTC. Developers have worked for years to optimize Bitcoin’s performance and functionality to be suitable for defi.
The SegWit update of July 2017 was a good example. It reduced transaction times and allowed blocks to be larger than 1MB. The Taproot update was then released. upgrade in November 2021 to introduce protocols like Pay-to-Taproot (P2TR) and Taproot Asset Representation Overlay (Taro). During the crypto winter, however, developers focused more on developing robust Bitcoin defi protocol.
Casey Rodarmor created Ordinals, a NFT-like system on the Bitcoin blockchain in January 2023. Ordinals rejuvenated the ‘Building on Bitcoin’ movement and opened a Bitcoin NFT market that can reach By 2025, $4.5 billion will be spent.
Rodarmor launched also the Runes protocol after the Bitcoin halving To mint tokens like memecoins, on Bitcoin. Users were able to create memecoins in just one week. minted Over 11,000 Runes Tokens account for over 45% of Bitcoin Transactions.
Layer-2 was launched in 2021 and offered Bitcoin smart contracts. The Stacks Nakamoto upgradeIntroduced in April 2024, the new system reduces transaction processing to just 5 seconds, and ensures that all Bitcoin blocks are final.
Developer activity, therefore, is increasing Bitcoin’s utility, and improving its scalability. This marks the beginning of Bitcoin defi.
Bitcoin has a lot of potential.
The total value of defi protocol has increased after a prolonged bear market crossed In February 2024, the 80-billion dollar mark will have been reached. The TVL does not include any BTC liquid reserves.
Defi Apps receive the majority of funds come Ethereum dominates the market with a share of almost 60%. The TVL could reach unheard of levels if defi protocol had access to even a small fraction of Bitcoin’s market capital.
Spartan Research: reportBitcoin defi provides a seven-fold opportunity for growth, without taking into account any additional liquidity. Here’s a way to demonstrate it using the available market data.
Bitcoin will have a market cap of $850 billion in December 2023. This is more than 3.1 times Ethereum, with $270 billion. Ethereum’s TVL app, which is Ethereum defi, was valued at $76 Billion or 28% its market capital compared with just $320 Million for Bitcoin defi.
Bitcoin defi represents a $238 Billion market opportunity by 2023 if we maintain the current data. This does not take into account any recent adoption spikes, or the influx of capital we are currently experiencing.
We have only just begun to scratch the surface of this market. As more defi apps and smart contract functionality launches in 2024, this market is expected to grow.
Bitcoin summer is on its way
For the development of Bitcoin defi, protocols such as Ordinals, Runes and layer-2 network like Stacks will be crucial. These protocols allow users to access the under-utilized BTC reserve while still leveraging security and decentralization provided by the Bitcoin chain.
Bitcoin maximumists claim that NFTs (non-fungible tokens) and memecoins are causing network congestion and destroying Bitcoin’s legacy. However, it may be necessary to highlight the fun side of cryptocurrency to increase Bitcoin defi’s popularity and encourage mass adoption.
The use of meme tokens could lead to increased developer activity, as well as more users taking part in Bitcoin lending, borrowing, trading, yield-farming, staking and GameFi or SocialFi protocols. Nakamoto’s alternative currency will be realized with these apps financial system come true.
Bitcoin-based defi is set to unfold its true potential as we move towards the summer defi. financial Users can now access services from anywhere in the world.
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Source: crypto.news