Recently, BitcoinFi has become a hot search headline. Its popularity has set a good start for the entire Bitcoin sector. A series of tokens related to the Bitcoin ecosystem have shown an upward momentum. Even though the market has slightly adjusted and is in a relatively weak situation, the performance of the Bitcoin ecosystem is still impressive, which undoubtedly shows that the market has great confidence in this track.
The Bitcoin ecosystem is booming, and there may be a lot of money and resources coming in in the future, forming an unstoppable bull market. So today, we will take stock of each category and see which Bitcoin ecosystems are currently developing well.
Bitcoin NFTs
As the saying goes, well begun is half done. Half of the credit for the rise in popularity of the Bitcoin ecosystem should be attributed to the Bitcoin NFT that became popular in mid-January.
On January 21 of this year, Ordinals, a protocol created by software engineer Casey Rodarmor on the Bitcoin mainnet, was officially launched. The protocol allows users to create unique NFTs on Satoshi (SAT), the smallest unit of Bitcoin. It should be noted that Satoshi is the smallest unit of Bitcoin, which is 0.00000001 Bitcoin, which means that 1 Bitcoin is equivalent to 100 million Satoshi.
The Ordinals protocol will number the SAT in the order in which it is mined, giving it a temporal meaning. It is worth mentioning that in addition to JPEG images, PDF, video and audio content can also be used to create NFTs.
The Ordinals protocol has been supported and welcomed by the public since its launch, and various NFT projects have been minted. According to data from the analysis platform Dune, Ordinals NFT has achieved rapid growth since February, with the cumulative inscription NFT minting exceeding 300,000 pieces, and the total cost generated so far has reached about 66 BTC.
Bitcoin’s NFTs minted through Ordinals also differ in many ways from those on Ethereum. The cost of minting NFTs via Ordinals on the Bitcoin network is significantly lower than on Ethereum due to the more homogeneous activity on the Bitcoin network.
Moreover, unlike most NFTs on Ethereum that are stored off-chain, NFTs minted through Ordinals are completely stored on-chain. There is no need to worry about data risks caused by malicious acts of third-party storage or project parties, and it is more decentralized.
At present, Bitcoin Punks, Ordinal Punks, TwelveFold, etc. are all popular and excellent Bitcoin NFT projects. For example, Bitcoin Punks is the first project to successfully upload Ethereum blue chip project CryptoPunks to the Bitcoin network using the Ordinals protocol. All assets in it have been minted by collectors for free. The casting cost of Bitcoin Punks is about US$25. According to some industry insiders, the secondary market price of Bitcoin Punks after casting is likely to reach 1 Bitcoin or even more, which is a hundred times the cost. However, this is just one person's opinion. Whether there will be such a high increase, we need to continue to wait and see.
BTC Sidechain
In essence, the sidechain protocol is a cross-blockchain solution. Through this solution, digital assets can be transferred from the first blockchain to the second blockchain, and can be safely returned from the second blockchain to the first blockchain at a later point in time. The first blockchain is usually called the main blockchain or main chain, and the second blockchain is called the sidechain. Initially, the main chain usually refers to the Bitcoin blockchain, but now the main chain can be any blockchain. Today, everything is back to the starting point, and BTC's sidechain has once again ushered in a wave of highlights.
The more famous sidechains in the BTC ecosystem are Stacks and RSK. The two projects have been successful for the following two reasons.
First, the launch of BTC’s NFT protocol Ordinals at the end of January caused a huge response and set off a wave of people minting NFTs on the BTC network. This benefit also brought positive effects to the BTC sidechain.
Secondly, on February 28, YUGA LABS announced that it would use the Ordianals protocol to release a series of NFTs called TwelveFold. This good news also caused a sharp rise in the Bitcoin ecosystem.
Compared with the outstanding students in these two side chains, Liquid Network's performance is mediocre, but it can represent some public chain products on BTC. Liquid is a side chain protocol running on the BTC blockchain, mainly serving cryptocurrency traders, institutional investors and exchanges. The network was developed by Blockstream and is mainly used to facilitate the issuance, exchange and transfer of assets on the BTC network to be completed safely, quickly and privately. It is worth mentioning that Blockstream's team background is very strong, including several core developers in the Bitcoin field. It is not an exaggeration to say that it is an all-star development team in the circle.
The biggest feature of Liquid is that it can quickly transfer transactions while also taking privacy into consideration. In addition, the Liquid chain allows the issuance of encrypted assets. For example, as early as November 2011, El Salvador planned to issue $1 billion in bonds on Liquid. However, this plan has not yet been implemented. As for how many projects there are in the Liquid ecosystem, we did not find much data to refer to through public channels. It can be seen that compared with other more mature Bitcoin ecosystem projects, Liquid's progress seems to be much slower.
The shining star of Layer2 - Stacks
We know that BTC itself belongs to Layer 1, it is not composable and cannot form smart contracts. Therefore, as an application, if you want to develop better, you obviously need to use BTC to build security on Layer 2.
BTC Layer 2 is an important infrastructure expected by BitcoinFi. Most BitcoinFis still use Ethereum L2 and side chains in their design, keeping the main chain as the data status and security foundation layer. As the lightning network of BTC's second layer, after several years of development, the data has maintained a certain growth trend, and it is more advantageous in the landing scenario of Bitcoin payment.
Currently, there are three major Layer 2 protocols on BTC, namely Lightning, RSK and Stacks (STX). Among them, Stacks has performed the best. As the most advanced Layer 2 protocol of Bitcoin, Stacks has gone the furthest in the application layer and has the most dApps. At the same time, it is also the only company among the three that has a token.
Careful friends may have discovered that the Stacks project has appeared repeatedly in the Bitcoin ecosystem mentioned above. This is because Stacks has performed very well recently. Let's take Stacks as an example to see what development trends and project features of the Bitcoin ecosystem cannot be ignored.
Stacks is a public chain project founded in 2015. It has two versions and launched the consensus mechanism PoX. According to public information, the Stacks team has successfully raised $75.6 million, which is a relatively sufficient amount of funds.
The native token of Stack 2.0 is STX, with an initial supply of 1.32 billion. It will be issued every year and is expected to reach 1.842 billion by 2050. It is worth mentioning that STX has performed very well since its launch. In particular, on March 1, when the overall performance of the market was not optimistic, it rose against the trend and broke through $1, with a 24-hour increase of 17.41%. Coincidentally, in the recent round of bull market, Stacks' performance has always been the hottest among the hot spots, maintaining an upward trend for 3 consecutive weeks, with the largest increase reaching 268.39%, becoming the best among the players.
At present, projects in the Stacks ecosystem can be divided into several categories, including wallets, DeFi, Dapp, etc. Projects such as Xverse, ALEX, BTC.us, etc. are all under Stacks.
Stacks is performing well, but that doesn’t mean its development path is smooth. Stacks has always had its own competitors.
First of all, there is the competition with Ethereum. Ethereum is currently the largest BTC lock-up platform, and it has great advantages in ecology. However, Ethereum still faces scalability issues. The DeFi craze has attracted a large number of users to Ethereum, but due to its limited network performance, network congestion often occurs during peak trading periods, and the gas cost surges, greatly increasing users' transaction time and transaction costs.
In comparison, Stacks 2.0 transactions have independent scalability and are not limited to the Bitcoin chain network, but can complete the final settlement on the Bitcoin chain. Stacks 2.0 chain transactions will generate a hash on Bitcoin, which will be automatically settled on each Bitcoin block as part of the consensus, which is very convenient and fast.
Secondly, Stacks has to face the competitive pressure from other projects in the Bitcoin ecosystem, one of the biggest competitors is RIF.
RIF (Rootstock Infrastructure Framework) is a Bitcoin smart contract platform. The project was founded in 2018 and raised a total of 22,000 BTC. RIF mainly creates decentralized applications through the RIF OS basic open framework, allowing users to build decentralized applications based on Bitcoin and RSK blockchains. At the same time, RIF's virtual machine is compatible with Ethereum EVM, and ERC 20 tokens on Ethereum can interact with tokens on RIF.
Comparing the code, mechanism, consensus, application architecture, tokens and other aspects, we can find that Stack 2.0 and RIF have their own advantages and disadvantages. If you are interested, we can find time to make a detailed comparison. In general, Stacks is a relatively high-quality public chain in the current Bitcoin ecosystem. It has obvious advantages, even development, and no obvious shortcomings.
The Future of BitcoinFi
For the entire cryptocurrency community, Bitcoin is an ancient and authoritative entity. It is ancient because the cryptocurrency community was created because of it, and it is the origin and foundation of the cryptocurrency community. It is authoritative because Bitcoin has extremely high stability and security. If a project is linked to it or uses it as a reserve currency, it is a reflection of its safety, reliability and strong strength.
Secondly, BTC is the cryptocurrency with the largest market value, and Defi is the largest crypto financial market. The combination of the two can form a perfect closed loop. In the future, all digital assets may revolve around BTC. At the same time, BTC also has extremely high security, so the security and stability of the BTC chain are beyond doubt. After carefully studying the characteristics of Stack 2.0 and RIF, it is not difficult to find that building ecological applications on BTC is a very promising thing.
However, although pioneers such as Stack 2.0 and RIF have designed the infrastructure to implement applications, the development of the Bitcoin ecosystem is not yet fully mature and still requires long-term efforts and patient exploration.
Text reference:
https://www.163.com/dy/article/HURF5V9105560YIP.html
https://baijiahao.baidu.com/s?id=1759312013452246701&wfr=spider&for=pc
https://www.theblockbeats.info/news/35143
https://www.chaincatcher.com/article/2060385
https://mp.weixin.qq.com/s/44DQLooRfFHXceK2L2UCIA
