What is BOUNCEBIT: Restore liquidity on Bitcoin
What is BounceBit: Liquid recovery on Bitcoin
Author: George Georgiev
Last updated on 11 May 2024 at 12:06
BounceBit offers primitives to return liquidity to Bitcoin. Here's everything you need to know about it.
The concept of liquid restocking, a topic that has gained significant popularity in recent quarters, offers users the exciting possibility of extracting additional value from their tokens.
However, this has mostly been implemented across a variety of Ethereum-based applications.
BounceBit, on the other hand, offers a Bitcoin repository infrastructure designed to provide a base layer for various repositories products.
In the following guide, we'll take a closer look at how BounceBit works, the token economy behind the original cryptocurrency, and more. Let's dig deeper.
speedy transfer
What is liquid recovery?
What is BOUNSPEAT?
What problems does BounceBit solve?
Understand BounceBit's infrastructure
Two-token Proof of Stake (PoS) structure
Economics of sustainable authentication
EVM agreement
BounceClub: For owners and members
BTC Bridge
Liquid staking codes
BounceBit Economy: Everything you need to know about BB Tokenomics
Binance Megadrop: Step by Step Guide
What is liquid recovery?
Before we explain what BounceBit does, it's important to understand the liquid restocking concept we mentioned above.
You may be familiar with liquid staking protocols and their liquid staking tokens (LSTs). It's a mechanism that came to prominence with protocols like Lido. Users can stake their ETH in Lido (or other protocols) and obtain a synthetic representation of this ETH. This is a new token that is supposed to be pegged to the value of ETH 1:1. They can then use synthetic ETH to perform various operations using other protocols that support it.
On the other hand, fluid recovery is a process aimed at increasing the economic security of external systems. Basically, you take your ETH synthetic token (LST) and restake it, receiving another token called a liquid restaking token.
As mentioned above, most LRT protocols are increasingly focusing on Ethereum due to its Proof of Stake architecture.
BounceBit, on the other hand, is building a BTC restorage infrastructure designed to provide a layer for restoring products on the Bitcoin network.
How do they do it? Well, let's find out.
What is BOUNSPEAT?
In an effort to reimagine the value of Bitcoin, BounceBit proposes an infrastructure designed on the conviction that Bitcoin should be predominantly asset driven at the infrastructure level.
BounceBit distinguishes itself as a first-tier proof-of-stake ecosystem where validators are required to stake BTC and native BounceBit token. This creates a dual-token security system that aims to strengthen the network itself but also improve the intrinsic value of Bitcoin by providing its holders with an active role in validating the BounceBit network.
The goal is to provide a symbiotic relationship between the native BounceBit token and BTC in an effort to create a versatile and resilient network.
BounceBit also promotes interoperability with other EVM-compatible networks, including staked assets such as BTCB on the “Build ‘N’ Build” (BNB) chain and Wrapped Bitcoin (WBTC).
Now, it's worth noting that when it comes to generating a return on Bitcoin - there is a very unique challenge that is inherently different from the return generation protocols associated with Ethereum. Bitcoin protocols cannot generate returns when BTC is held within multi-signature wallets. This is what BounceBit is addressing by integrating a centralized financing (CeFi) approach, leveraging the custodial services offered by Mainnet Digital, as well as Ceffu's MirrorX technology suite.
This essentially allows Bitcoin to maintain its on-chain presence, while also participating in trading activities on centralized exchanges.
What problems does BounceBit solve?
Addressing the lack of transparency
Those who were around in 2022 remember the transparency issues that have plagued the industry through the likes of Celsius and others.
BounceBit includes on-chain Proof of Reserve (PoR), while also maintaining transparent activities in an effort to restore trust and offer a secure platform that allows BTC holders to earn interest.
Untapped BTC Assets
Undoubtedly, Bitcoin holders face the challenge of underutilizing their assets. BounceBit seeks to address this challenge by providing them with a means to effectively stake their assets in the booming sectors of decentralized finance and non-fungible tokens (NFTs).
Optimizing Bitcoin utility by enabling additional use cases
As an extension of the above, BounceBit is also committed to expanding the public benefit of the BTC network and Bitcoin as a whole. The goal is to expand opportunities for BTC holders and leverage the cryptocurrency as a major asset.
Standardization of BTC across chains
BounceBit identifies the lack of a smart contract platform within the Bitcoin ecosystem as limiting the overall development of decentralized applications and is working to provide one.
Understand BounceBit's infrastructure
BounceBit is building a network that leverages the well-known Proof-of-Stake (PoS) consensus algorithm to rethink traditional staking models that focus on a single token. They call this approach double Proof of Stake (PoS).
Two-token Proof of Stake (PoS) structure
In light of the above, it should be noted that the protocol architecture includes a number of node operators. These can be selected as validators. These are the parties that have to stake BB (BounceBit native token) and/or BBTC (BTC betting on the BounceBit chain). Their job is to record and verify transactions on the network, and as a reward – they receive transaction fees. Since it is a hybrid model, validators can choose to accept BBTC and/or BB tokens.
The purpose of accepting BTC, although proven, into the consensus mechanism, is to enhance the protocol with the deep liquidity provided by the Bitcoin network, while also taking advantage of its relatively low volatility.
Economics of sustainable authentication
In an effort to balance the demands of network operation, BounceBit enables validators to charge a commission on staking rewards. This approach attempts to ensure that validators are appropriately compensated for the important role they play in maintaining the strength and functionality of the network.
EVM agreement
The BounceBit chain is fully compatible with both the Ethereum Virtual Machine and with Solidity. The latter is the programming language mostly used to create smart contracts for Ethereum. This ensures that the migration process for developers will be seamless while also benefiting from the proven security and abundant ecosystem of Ethereum.
BounceClub: For owners and members
BounceClub draws inspiration from Apple Inc.'s quest. For innovation. It is an on-chain Web3 world where users are empowered to customize, run, and interact with various decentralized applications.
For BounceClub Owners -> If you meet the criteria to own a BounceClub, you will be able to select the required protocols from the BounceBit App Store and allocate the space seamlessly and in a very user-friendly way. There is a complete guide to it that you can find here.
For BounceClub Members -> Suppose you are not interested in running BounceClub, you can still browse through different clubs created by other users and participate in different Web3 activities. You will only need to connect your wallet.
BTC Bridge
The main purpose of the BTC bridge within the BounceBit ecosystem is to provide a secure way to transfer BTC between the Bitcoin network and other EVM chains, including BounceBit.
It is a critical element of functionality and complements BounceBit's vision and purpose.
It is important to note that network auditors are responsible for maintaining the security of the bridge. Each validator also runs a bridge node. It contributes to the signing of messages across the chain, resulting in multiple steps of the multi-signature approach. You can learn more about the BounceBit BTC bridge here.
Liquid staking codes
BounceBit has a native liquid storage smart contract. If users choose to stake BB or BTC, they will receive an LST (liquid signature token). here they are:
stBB - derived from staking BB
stBBTC – Derived from BBTC (harvest BTC on BounceBit)
They can later be redistributed to participating security clients with the aim of pooling security and unlocking liquidity of pledged assets. LSTs here can be replaced simply by uninstalling. After requesting a refund, users have to wait 24 hours before they can claim.
BounceBit Economy: Everything you need to know about BB Tokenomics
First things first, the BounceBit economy is primarily made up of three types of actors, all of which are relatively self-explanatory:
Users
BB owners
Node operators
BB is the native token that powers the BounceBit platform. The maximum total supply is 2.1 billion (in honor of the number 21 million - the maximum supply of Bitcoin).
BB codes can be used in multiple ways
