DeFi Arrives On Bitcoin Network Following RSK’s Rollout Of Layer-2 Scaling Solutions
The decentralized finance (DeFi) movement has emerged as one of the most promising areas of the thriving blockchain industry. At present, most DeFi protocols and decentralized apps (dApps) are hosted on the Ethereum blockchain, which has driven the network to its maximum capacity, resulting in frequent network congestion and heightened gas costs.
Bitcoin, on the other hand, didn’t have much role in the DeFi ecosystem. However, given the problems faced by Ethereum, there has been a massive uptick in demand for alternatives. Following this, several promising layer-2 scaling solutions have entered the marketplace, each designed to boost the scalability, performance, and efficiency of Ethereum.
Amidst all of the Ethereum-oriented projects, RSK, the world’s most secure smart contracts
platform built on the Bitcoin network, is spearheading efforts to add DeFi to the legacy network’s offering. Besides leveraging the best features of Ethereum and the Bitcoin network’s unparalleled hash power, RSK facilitates the deployment of DeFi protocols and dApps on the Bitcoin network, granting bitcoin holders the opportunity to trade, lend, borrow, and earn interest on their crypto holdings.
With bitcoin quickly gaining acceptance as a legal tender in countries like El Salvador, there was a need for the legacy network to serve the role of more than just a store of value. Unlike Ethereum and other networks, Bitcoin was absent from the DeFi race. Yet, RSK’s smart contracts functionality and interoperability with the Ethereum Virtual Machine (EVM) and Solidity Smart Contracts extends the capabilities of the legacy Bitcoin network, opening the DeFi floodgates.
Extending The Capabilities Of The Bitcoin Network
RSK has been spearheading the development of the Bitcoin DeFi ecosystem as the first open-source smart contract platform with a two-way peg to Bitcoin (BTC) that facilitates seamless cross-chain transactions. Although layer-2 scaling solutions for the Bitcoin network took a considerable time to arrive, RSK is poised to play a critical role in the ongoing growth and expansion of both the DeFi ecosystem and the Bitcoin network.
Since its inception, RSK has witnessed extraordinary traction on its platform due to its value-added and functional approach to the Bitcoin network by enabling smart contracts, near-instant payments, and better scalability. Several prominent DeFi platforms like RIF on Chain (ROC), Money on Chain (MOC), Sovryn, Kripton Market, Tropykus, Bundles Finance, and Defiant, among others, are leveraging the RSK network and its RIF (Infrastructure Framework Services) to facilitate decentralized sharing economies.
In addition to smart contract functionality and interoperability, RSK also offers tools and services for developers keen on deploying smart contracts on Bitcoin at minimal transaction costs. It makes use of a forked version of the Ethereum Virtual Machine (EVM), which enables it to seamlessly interact with Ethereum smart contracts and all other tools to run them. As a result, dApp developers can build and easily migrate their existing products to the Bitcoin network.
The network recently surpassed Lightning Network in total locked value (TVL), reaching the 2,000 locked BTC milestone, further highlighting the strong appetite among users for DeFi on Bitcoin. Beyond extending the capabilities of the Bitcoin network, RSK also offers higher interoperability, scalability, and affordable transactions.
For instance, DAI stablecoin users generally end up paying substantial fees to transact on the Ethereum network. With MakerDAO, RSK enables users to transfer DAI from Ethereum as rDAI on its network via the RSK Infrastructure Framework (RIF), guaranteeing a stable and decentralized exchange rate through smart contracts. Accordingly, users can take advantage of RSK’s low gas costs while using their DAI stablecoins as they want. Compared to DAI transactions on Ethereum, users can save up to 80% of the corresponding transaction costs of transferring DAI from one wallet to another on the RSK network.
Furthermore, RSK also allows users to opt for merged mining, a concept that will enable anyone to mine tokens for two or more networks simultaneously with the same hardware. RSK miners earn almost 80% of the fees for every competing block submitted to the network compared to other networks’ mining rewards. Hence, users can join mining pools and stake their holdings in lending pools to earn additional yield.