Decentralized finance, better known as “DeFi,” has taken the cryptocurrency industry by storm over recent months. This industry sector has gained increasing traction as investors see the need to earn yields on their capital. DeFi applications have garnered $12 billion in deposits, per a number of data sources.
The issue is: DeFi has been centered around Ethereum thus far. This has meant that Bitcoin, which investors like Anthony Pompliano call the “original” DeFi application, has not been able to truly play a role in blockchain-based financial applications.
With Wall Veteran Raoul Pal arguing that Bitcoin is a “pristine reserve asset,” indicating it is the most likely contender to be the reserve currency of a decentralized economy, it is important Bitcoin reclaims its role as the king of DeFi.
WHAT IS RSK?
RSK, which takes the form of a Bitcoin sidechain, offers a Turing-complete virtual machine that is compatible with Ethereum and 30-second block times for fast transactions.
RSK’s token, Smart Bitcoin (RBTC), is secured by merge mining, meaning that users are offered the same double-spend prevention measures and transaction settlement finality that users expect from the original Bitcoin chain.
DEFI INNOVATION ON BITCOIN RIGHT NOW
The RSK-based protocol Money On Chain has just begun to roll out new products for developers to leverage. Money On Chain is looking to service a number of critical needs within the Bitcoin DeFi ecosystem. Developers have launched a series of products built on the Money on Chain protocol called RIF On Chain.
RIF On Chain‘s developers are also offering other products, such as RIFPRO, a token that allows holders to earn interest on their holdings of Bitcoin, and RIFX, a token representing a leveraged Bitcoin position. These products allow users to bypass centralized services, which carry custodial risks.
RskSwap is an iteration of the Uniswap protocol, launched on Ethereum. RskSwap is a decentralized exchange focused on user experience. Erik Voorhees, an early Bitcoin adopter, and innovator called decentralized exchanges the most “cypherpunk thing going on in crypto” at the moment. RskSwap is part of that group of decentralized exchanges.
Ethereum DeFi projects can also connect to RSK through a new interoperability bridge. This allows established DeFi protocols and coins to interact with the base money of the entire cryptocurrency ecosystem, Bitcoin, creating a new degree of utility and liquidity for blockchain financial applications.
“RIF integrating DAI creates a new world of opportunity for the bitcoin community to participate in defi,” he said announcing this recent integration.
LEADING THE DEFI MOVEMENT ON BITCOIN
Current systems do not cut it: if you want to use Bitcoin in Ethereum’s DeFi applications, one must send coins to a centralized counterparty, then trust that they do not lose or take your coins.
As Bitcoin becomes an increasingly dominant reserve asset, the desire for Bitcoin to be used in decentralized financial applications will increase. RSK plays a pivotal role in allowing BTC to truly be leveraged in decentralized applications. In fact, right now, RSK might be Bitcoin’s best bet to make a strong return to DeFi.