De-Fi on Bitcoin

[Abiky]

So many people have been focused on ETH as new "De-Fi" platforms emerge over time. The number of stablecoins available on the ETH blockchain, makes "De-Fi" extremely attractive. It's no secret that most dApps, stablecoins, and tokens are living on Ethereum. But what if Bitcoin gets smart contract capabilities? Then it would be able to outmatch Ethereum in the "De-Fi" space. Luckily, there are a number of "sidechains" and protocols which makes this a reality. One of them is RSK (formerly known as "Rootstock") with its own token pegged to Bitcoin itself (exchangeable at a 1:1 ratio). Unfortunately, RSK is not very popular in the crypto/Blockchain space. As long as this is the case, Ethereum will remain as the leader of "De-Fi".

What are your thoughts? Will "De-Fi" become popular on Bitcoin as ETH's fees rise all the way to the moon? Or will smart contracts on Bitcoin become a "failed experiment"? Your input will be greatly appreciated. Thanks in advance.

[NeuroticFish]

Will "De-Fi" become popular on Bitcoin as ETH's fees rise all the way to the moon? Or will smart contracts on Bitcoin become a "failed experiment"?

There's more than just Bitcoin and Ethereum.
Many other blockchains were or are now just as good for DeFi as Ethereum. Or at least close enough. There's quite a competition there you seem to have missed out completely.

I don't see a good reason for Bitcoin care at all about this and I think that Bitcoin side chains has lost the train for this.
So it's imho it's closer to "failed experiment", although it's not even known enough to be called like that by such a number so it would matter...

But don't worry. I am not convinced that DeFi does indeed worth the hassle...

[Coyster]

As a Bitcoiner, I wouldn't mind ethereum's continued leadership of the DeFi ecosystem, I for one do not believe in DeFi and I don't think there's any need incorporating it into the Bitcoin network, DeFi came with quite a lot of hype, but most of that seem to have died down with all the hacks and scams that's happened, the more reason I'm not rooting for this.

Tbh, I don't quite think there's going to be any pros for Bitcoin if DeFi is on the network, and you and I know chances are low it's going to happen, it's an 'experiment' that won't happen.

[DooMAD]

So it's imho it's closer to "failed experiment", although it's not even known enough to be called like that by such a number so it would matter...

In some ways, DeFi still feels like a solution in search of a problem.  For most people, it doesn't serve a real-world use case yet.  Which is why it's primarily used as a buzzword to peddle scam tokens and fleece the gullible at the moment.  Conceptually, it's a fine idea, but I'm certain there's a long road ahead before people really need this technology.  I wouldn't say it has "failed", just that it hasn't discovered its true purpose yet.

[Welsh]

In some ways, DeFi still feels like a solution in search of a problem.  For most people, it doesn't serve a real-world use case yet.  Which is why it's primarily used as a buzzword to peddle scam tokens and fleece the gullible at the moment.  Conceptually, it's a fine idea, but I'm certain there's a long road ahead before people really need this technology.  I wouldn't say it has "failed", just that it hasn't discovered its true purpose yet.

Exactly, for something to be implemented I'd like to see a problem that its directly correcting, or that it increases the quality of life of using Bitcoin. Smart contracts although being a good idea, aren't particularly useful for a majority of people. They have specific use cases, which are beneficial, but for anything to be successful it needs to be accessible to the general audience, and usable for them too. Complicating something, which many are never going to have a use for, could be detrimental to the adoption of Bitcoin.  It also, doesn't mean something like DeFi will not be implemented in the future, but right now I don't see any glaring issues that it fixes.

[hatshepsut93]

No one should chase innovation for the sake of innovation. Nearly all inventions are doomed to fail, so most of the time when someone tells that X is the next big thing, it's not. Let Ethereum and other shitcoins play with DeFi and smart contracts, if in 5 years it will be massively adopted, then it will make sense to start working on porting it to Bitcoin. Why should Bitcoin devs waste their time on working on a feature that could very likely be useless?

[Bittothefuture]

How is DeFi on Bitcoin!? (really asking) I wish there was as many defi applications on btc as ETH.

[dansus021]

Will "De-Fi" become popular on Bitcoin as ETH's fees rise all the way to the moon? Or will smart contracts on Bitcoin become a "failed experiment"?

There's more than just Bitcoin and Ethereum.
Many other blockchains were or are now just as good for DeFi as Ethereum. Or at least close enough. There's quite a competition there you seem to have missed out completely.

I don't see a good reason for Bitcoin care at all about this and I think that Bitcoin side chains has lost the train for this.
So it's imho it's closer to "failed experiment", although it's not even known enough to be called like that by such a number so it would matter...

But don't worry. I am not convinced that DeFi does indeed worth the hassle...

In fact bitcoin have USDT in Omni layer and also in tron and much more well eth right know is popular but the other blockchain will gain more popularity maybe people not using Omni because the high fee but maybe people can using it for something else

[pooya87]

For starters there hasn't been any real world application for DeFi so far and it has been the continuation of the same ICO scams as before. The only reason why people keep going to ethereum as the platform to build these (despite the fact that it is the worst, slowest and most expensive platform for smart contracts) is that they are trying to sell garbage and the only way to sell garbage is to hype it up first.

That's why RSK isn't popular! It takes more effort to build one in that side chain and also it has to have actual utility which none of them have.

[celot]

Defi project have over and now back again to bitcoin and altcoin platform without DeFi, when first time DeFi make investor loss and not have recovery for any DeFi coin project to buy back I think investor never wanna lost twice with the same coin platform, now have ended the era of DeFi coin just waiting with new platform in this year, which one become most interested platform for coin right now?

[irixo10]

Since RSK is not very popular then achieving that type of milestone will be hard, also I think there are other Defi projects on blockchains like Tron although they are not much and/or popular as well, thus meaning all the DeFi projects finds Ethereum blockchain more suitable and compatible. Nevertheless, in my own opinion, I do not think any Defi will work on Bitcoin network because it will require a lot of work which many Defi developers doesn't need, also with the level of discouragements surrounding it nowadays, it is only but a shadow of itself, that is, a lot of hacks has happened in Defi projects, a lot of scams has taken place and many of them are just a repetition of the ones currently available thus the reason they are just seen as an opportunity to make quick money, hence easy pump and dump. Furthermore, the question which begs for answer is, even with the high fees on Ethereum, why are there still upcoming DeFi projects which finds it better for their development? The simple answer is, Ethereum is more suited for DeFi projects.

[milesfull]

Defi is imposible on btc. TPS too low, protocol is just not suitable for this

[amishmanish]

Several users with educated opinions that are widely accepted across the forum opine that DeFi on Ethereum/ Other chains is not going anywhere. I don't understand how this is not completely false AND more importantly, misleading to the bitcoin community. Scams have existed in cryptocurrency since the beginning. Nobody knows this more than the Bitcoiners who have themselves seen a lot of Lending/ borrowing and attempts at establishing yield markets which resulted in scams. Pirate was one of the guys i believe. Then there was this MPOE guy. The OGs would recall it much better.

On Ethereum, there are hundreds, if not thousands of developers working on implementing financial products through smart contracts. They are receiving millions in funding AND, more importantly, there are people trading in their BTC to use custodial ERC-20 Wrapped Bitcoin tokens to stake and earn interest on them. The locked values go up to hundreds of millions on a lot of these platforms. Thus, OP and Post-2016 Bitcoiners wondering about whether this value can be accrued onto bitcoin or bitcoin focussed platforms like RSK is natural.

Saying that products are not being developed because the "Devs are not interested" doesn't make sense. Bitcoin devs are not demi-gods who can churn out code in any language they want and compete with the best of smart-contract devs at the drop of a hat. The simple fact is that there just isn't enough incentive for those devs to focus on smart contracting capabilities. Bitcoin dev funding has become concentrated in the hands of a few powerful organizations that pay for the upkeep of Bitcoin core and for developments along lines that are beneficial to them rather than the community. Blockstream's Element sidechain and Liquid federation exemplify this. The ground reality which many here prefer to ignore is that bitcoin community has not been able to develop a smart-contract focussed dev pool.

The latest developments like Schnorr Sig and Taproot are mainly focussed on obfuscating the ownership and movement of bitcoin when done by institutions or multiple parties as against the individual. Nothing from that accrues back to the community or the little guy trying to find interest in bitcoin. This is why none of the newer devs are interested in either Rootstock or Simplicity. Those who still hack away at them do it out of purely personal interest or because they are paid to do so by one of the biggest sponsors.

The one place that can be a crucible for interest to new tech on Bitcoin is the forum. Unfortunately, people here are too busy defending their fiefdoms and ranting against Ethereum/ Alts to see the bigger picture as to where the world is going to.

TLDR; I disagree with what the maxis here and at CT keep painting about smart contract capabilities. Smart contracts have real world use and are gaining dev attention, academic research as well as funding. Just because the only bitcoin related products are Mixers and Casinos doesn't mean that what alternate chains are doing is useless. It is up to us to wake up and smell the coffee rather than killing these conversations before they even start.

[Walterhank]

I don't think bitcoin can grow or could be used other than as an asset. If you ask me, its real capabilities lie in it being a crypto asset. We already have https://mycryptoparadise.com/what-is-defi-and-why-does-it-matter-for-future-trade-exchanges/ Defi projects and with proper planning, they can be used widely.

[joniboini]

Defi is imposible on btc. TPS too low, protocol is just not suitable for this

Depends on what you mean by "DeFi" imo. Does P2P lending count as "DeFi" since there's no centralized party involved? Does DeFi needs smart contracts or you can just use a multi-sig txs? Etc. There's a side-chain too, so that could be a solution.

How is DeFi on Bitcoin!? (really asking) I wish there was as many defi applications on btc as ETH.

If you search about it, you'll find something like atomic.loans.

[DooMAD]

The simple fact is that there just isn't enough incentive for those devs to focus on smart contracting capabilities. Bitcoin dev funding has become concentrated in the hands of a few powerful organizations that pay for the upkeep of Bitcoin core and for developments along lines that are beneficial to them rather than the community. Blockstream's Element sidechain and Liquid federation exemplify this. The ground reality which many here prefer to ignore is that bitcoin community has not been able to develop a smart-contract focussed dev pool.

I think the question is more one of priorities than it is about funding.  Regardless of how centralised or not you feel development has become, I still believe the decisions would be made based on what provides the greater benefit for the network as a whole.  It's possible I'm being naive, but I think more people overall will benefit from things like privacy and scaling enhancements than they would from smart contracts.  Throwing money at smart contracts wouldn't suddenly make them more useful to the average person.

[figmentofmyass]

So many people have been focused on ETH as new "De-Fi" platforms emerge over time. The number of stablecoins available on the ETH blockchain, makes "De-Fi" extremely attractive. It's no secret that most dApps, stablecoins, and tokens are living on Ethereum. But what if Bitcoin gets smart contract capabilities? Then it would be able to outmatch Ethereum in the "De-Fi" space.

as time goes by, i'm less interested in trying to have bitcoin integrate every possible feature and use case, including complex smart contracts. that encourages massive blockchain bloat (just look at ethereum!) which in turn will threaten bitcoin's primary use case as decentralized money. and that's really what matters---retaining the decentralization and consensus that underlies bitcoin's monetary properties.

i don't care about driving de-fi hype to bitcoin. bitcoin is clearly going to the moon no matter what.

Unfortunately, RSK is not very popular in the crypto/Blockchain space.

can anyone give me the tl:dr on what RSK can do (or not do), and why nobody uses it? i remember it was the talk of the town a few years ago.

[webtricks]

Unfortunately, RSK is not very popular in the crypto/Blockchain space.

can anyone give me the tl:dr on what RSK can do (or not do), and why nobody uses it? i remember it was the talk of the town a few years ago.

RSK is pretty much like Ethereum blockchain as far as use-case is concerned. You can create complex transactions, write smart contracts, lend or borrow like DeFi dapps, etc. In-fact, smart contracts are written in Solidity only just like Ethereum chain.

The major difference which makes RSK different from Ethereum or other blockchains is the way network security is maintained and how it is linked to Bitcoin. RSK secures its blockchain with merge mining which means Bitcoin miners can include the merkle root of RSK transactions while mining and use the same computational power for RSK as well. Since, the difficulty level is lower for RSK network, Bitcoin miners can quickly find block solution for RSK so new RSK blocks can be created quickly than Bitcoin blocks which means more scalability, more transactions and less fees.

In order to move bitcoins to RSK network, an independently executable smart contract known as Bridge Contract is used. A user sends bitcoin to multi-sig address. The private keys of the multi-sig address (better known as Bitcoin PowPeg Vault on RSK) are stored in special-purpose microcontrollers (inside PowHSM device) which virtually makes it impossible for any party to know them. On top of that, PowHSM device is included with SPV node. So when user sends fund to mutli-sig address, bridge contract builds the RSK transaction with equivalent RBTC, then sends the unsigned transaction to PowHSM devices. Next, the SPV node of the PowHSM independently verifies whether enough confirmation has taken place, if yes then independently signs the transaction using private key, sends the signatures to Bridge Contract which accumulates all signatures from different PowHSMs and create the final signed transaction, broadcast it and user gets the equivalent RBTC on his RSK address. Withdrawing the funds (known as peg-out) works the same way in opposite manner.

Since, 90% of the Bitcoin miners today are doing merge mining, out of which 60%+ are doing for RSK so it is safe to assume that RSK sidechain is securer than altcoin blockchains. Morever, in-built SPV node and tamper-proof micro-controllers make functionaries of RSK superior to other sidechains. So, on whole we can say RSK is one of the best alternative available today for smart contract creation.

RSK is still in development phase. The process of peg-in and peg-out which I explained couple of paragraph above is known as PowerPeg protocol which is only-recently introduced. Earlier it was using centralized custody of funds by multi-parties on Bitcoin side. That maybe the reason, RSK doesn't have wide acceptability like Ethereum yet.

[amishmanish]

In order to move bitcoins to RSK network, an independently executable smart contract known as Bridge Contract is used. A user sends bitcoin to multi-sig address. The private keys of the multi-sig address (better known as Bitcoin PowPeg Vault on RSK) are stored in special-purpose microcontrollers (inside PowHSM device) which virtually makes it impossible for any party to know them. On top of that, PowHSM device is included with SPV node. So when user sends fund to mutli-sig address, bridge contract builds the RSK transaction with equivalent sBTC, then sends the unsigned transaction to PowHSM devices. Next, the SPV node of the PowHSM independently verifies whether enough confirmation has taken place, if yes then independently signs the transaction using private key, sends the signatures to Bridge Contract which accumulates all signatures from different PowHSMs and create the final signed transaction, broadcast it and user gets the equivalent sBTC on his RSK address. Withdrawing the funds (known as peg-out) works the same way in opposite manner.

Thanks for the great info. So the PowPeg protocol  is using some sort of hardware to enable a trustless (as in not trusting a human) bridge. Thanks for this update. The hardware device referred as PowHSM is run in conjunction with a special type of Full node.
 
The issue mostly pointed out about this is the finality time needed for the Peg-in and Peg-outs. What are your thoughts on this @webtricks? For example, If a trader moves funds to the RSK sidechain, he needs to wait 200 blocks to confirm it on the sidechain. Though, just like the wrapped BTCs, if a platform of trading develops on the other side, traders will find it easy enough to buy, sell and use BTC on the sidechain. Irrespective of when they have been ported.

[shoreno]

How is DeFi on Bitcoin!? (really asking) I wish there was as many defi applications on btc as ETH.

its already posted above , its posible for btc to have a defi but the process may not be as easy as eth defi , this can also be the reason why they didnt bother to experiment and create one  because if there are , they already announce it before during the hype of defi begins . btc is already doing well and we dont want that to disrupt that by introducing new features that could gone wrong . we know defi and if you want defi there are many of them on the eth platform , arent you contented on them ? dont tell me you already tried them all