Thoughts on DeFi on Bitcoin Network?

[zrixes]

DeFi has been in the spotlight in recent months, with several DeFi projects gaining traction in the past couple of months and their tokens soaring in prices have attracted a lot more attention.

I'm just wondering, with over USD10billion locked in DeFi protocols, can we have DeFi built on Bitcoin Network? Since Bitcoin Network is the most secure blockchain network in the industry, and DeFi handles billions of dollars and possibly trillions as it scales. Should DeFi built on the Bitcoin Network makes more sense?

I explored a little in this area, realising that there are solutions out there that brings smart contract capabilities to the Bitcoin Network(e.g. Stacks Protocol) thus I'm wondering if this idea even a feasible idea?

Would like to hear everyone's thoughts!

Wrote about it below:
https://ethan-tan.com/defi-on-the-bitcoin-network

[Dsdaq]

Bitcoin as a DeFi Platform

First of all, Bitcoin itself is a form of DeFi. Bitcoin enables, in a decentralized fashion, the traditional financial service of secure value storage and transfers. The Bitcoin network was likely the first real world DeFi app to ever exist, and developers are now also building new DeFi apps on top of the Bitcoin network.
The best example of a DeFi app built on top of Bitcoin may be Abra. Abra’s long term goal is to effectively become a global, non-custodial bank that can be used in a permissionless manner. It’s built on a system of Bitcoin smart contracts.
Other examples of DeFi on Bitcoin include the Lightning Network, Blockstream’s Liquid sidechain, and the decentralized exchange Bisq.

[zrixes]

Did you see what DeFi did to ETH fees? What do you think would happen on Bitcoin blockchain? And what exactly would be the benefits of making it on Bitcoin blockchain, because I do not see them (or rather to be precise, there would be much more problems, than there would be benefits of doing it).

Bitcoin Network was created to be a secure and decentralize way for people to store value, thus possessing limited scripting language capabilities. This limits the type of applications that developers can build on top of Bitcoin network. Proof-of-Transfer enables developers to innovate on Bitcoin with Clarity smart contracts which eliminate a whole class of smart contract bugs and provides for greater predictability.

Benefits would be that, developers can now leverage on Bitcoin network, which is the most secure network. While shifting all the heavy lifting workload, outside of bitcoin network.

The idea came about when I read the Proof of Transfer whitepaper.
Proof of Transfer whitepaper: https://uploads-ssl.webflow.com/5e7b1a27d160ce49af1c24e1/5f1596b12bcc0800f3dcadcd_pox.pdf

[joniboini]

What kind of DeFi are we talking about here? Something like a loan platform? It already exists, https://atomic.loans.

Developing it on the main-chain would probably not ideal, and that's why most "DeFi Bitcoin projects" are trying to bring their own side-channel/layer 2 solutions for that. IMO it is nothing more than trying to use the name of Bitcoin to fish money from retail investors.

[blockman]

I don't think that's a good idea. Just stay on Ethereum or any altcoin blockchain that they can use for another Defi product. Defis are good as it is today, nothing more nothing less.

IMO it is nothing more than trying to use the name of Bitcoin to fish money from retail investors.

They'll use the name of bitcoin again to milk the investors, whether they will serve that it's a secured network or so. But nothing new just like those forks that made through bitcoin.

[hatshepsut93]

Since Bitcoin Network is the most secure blockchain network in the industry

Bitcoin is the most secure network because it doesn't have smart contracts. Bitcoin's script language is on purpose very limited to prevent bugs, and as we know from practice, smart contracts often lead to hacks or bugs that make users lose money. There has been many hacks of DeFi since its introduction, so I believe Bitcoin shouldn't be a coin that chases hyped features, it should wait as long as needed, and only incorporate some features if they are truly useful and don't harm its decentralization.

[zasad@]

Would like to hear everyone's thoughts!

My thoughts will not please you because I think this idea is bad.
We are being offered a new blockchain to solve the problem.
The POW algorithm is considered outdated, but all the best decentralized coins work on this very algorithm.
The POS algorithm is very fast, but in practice it has one big problem - decentralization. Whoever has more coins has more nodes, or whoever has more coins can vote for candidates for the main nodes, and as a result we get a network with centralized control. EOC, TRON, etc.

What is presented to us under the guise of DEFI is not DEFI.
If the owner of a smart contract can block a token on your wallet (any stablecoin except for DAI), then storing it on your wallet is no different from using it in any custodial service.

[Dragonfund]

Why do you think most developers prefer to used Ethereum blockchain network for DeFi and ignored Tron if we are to consider the immense increase in transaction fee of ethereum?
Ethereum is simpler, very popular, and human friendly integration with DApps written in solidarity language. DeFi was one of the Buzzword that kept ethereum network demanding over this year crypto season.
DeFi can be hosted on other blockchain but I think ethereum fits the most, if its about DeFi lock up security fear, dnt forget that developers can make error and once Hackers locate the bug, they will wipe out all the funds. Bitcoin has also face different attacks from Hackers in past, so I don't think it's safe neither.

[Bitcoin_Arena]

Not possible on the Bitcoin main-chain and even if the idea was brought up, I think 97%+ of the bitcoin community would disagree. Bitcoin was not intended to be a DeFi or those projects pretending to be "Decentralized" but are actually centralized. If you read the white paper, the whole idea rotated mostly around an electronic peer to peer transaction system. Not a decentralized bank or loan system

[FairUser]

Of course, since Bitcoin is itself a form of DeFi. But I think that's not up, because the problem we use DeFi on ETH platform because it's so popular and it's easy to use too. Moreover, Dapps on the ETH network are designed broadly so it will be easier to exploit. I think next time will not be on the BTC network but on other platforms such as: POLKADOT, BINANANCE, TRX, ...

[zasad@]

Why do you think most developers prefer to used Ethereum blockchain network for DeFi and ignored Tron if we are to consider the immense increase in transaction fee of ethereum?
Ethereum is simpler, very popular, and human friendly integration with DApps written in solidarity language. DeFi was one of the Buzzword that kept ethereum network demanding over this year crypto season.
DeFi can be hosted on other blockchain but I think ethereum fits the most, if its about DeFi lock up security fear, dnt forget that developers can make error and once Hackers locate the bug, they will wipe out all the funds. Bitcoin has also face different attacks from Hackers in past, so I don't think it's safe neither.

Tron is a fork of Ethereum. Ethereum and TRON use the same smart contract programming language.
  "Pseudo-decentralized mechanism TRON" as many experts say about this protocol.
https://cryptocurrency.tech/tsentralizatsiya-tron-vynudila-ego-soosnovatelya-pokinut-proekt/
But the TRON ecosystem has a number of differences that prevent it from running those applications that are currently running on Ethereum.

[icekohl]

Bitcoin is only suitable as a store of wealth thanks to its worldwide network. But because of the transaction speed issue, it is difficult to meet the demand for DeFi with the huge number of transactions today.

[tbterryboy]

You mean building DeFi directly on Bitcoin? I believe that’s being done. Before now I have seen an article on Coindesk that was also focused on this, funny enough it was this month that I saw the article.

Based on what the author was saying, building a Bitcoin DeFi on Ethereum just as some people here have said will automatically make the project a second class, because it’s already being backed by Ethereum and not Bitcoin, the network fees and everything that has to do with the DeFi would be eth. With that said, he added that a better option, instead of Ethereum which is fatal flaw, would be Bitcoin layer 2 which is providing better tools to create DeFi on Bitcoin native environment.

[target]

Smart contacts always have an exploits that is why there are many hacks going on.

But I think is what they are doing on RSK Smart Bitcoin that they have smart contract on top of the network?  
I'm not very familiar o the project but there were chats that I've read about Defi on it.  Not sure how true but I hope there will be less effect on its price if there will be something like Defi on BTC.

You mean building DeFi directly on Bitcoin? I believe that’s being done. Before now I have seen an article on Coindesk that was also focused on this, funny enough it was this month that I saw the article.

Based on what the author was saying, building a Bitcoin DeFi on Ethereum just as some people here have said will automatically make the project a second class, because it’s already being backed by Ethereum and not Bitcoin, the network fees and everything that has to do with the DeFi would be eth. With that said, he added that a better option, instead of Ethereum which is fatal flaw, would be Bitcoin layer 2 which is providing better tools to create DeFi on Bitcoin native environment.

Do you mean the WBTC?