A new era has begun for the Bitcoin blockchain.
Last week, a group of developers deployed a suite of Uniswap smart contracts directly on the Bitcoin blockchain.
Uniswap is a decentralized cryptocurrency exchange ( DEX ) that runs on multiple smart contract-enabled blockchains such as Ethereum and Polygon , and is powered by Automated Market Maker ( AMM ) smart contracts.
According to @punk3700, a new Bitcoin-based DEX called Trustless Market allows its users to exchange so-called “Smart BRC-20 tokens”, provide liquidity and earn a 2% transaction fee, and issue new Smart BRC-20 tokens. one of the developers of DEX. ‘
BRC-20 is a new bitcoin-based token standard that allows users to record information in each satoshi, which is the smallest unit of BTC—there are 21 million satoshis in one bitcoin.
According to the website Trustless Market “Smart BRC-20 is the first smart contract deployed on Bitcoin”.
“They work exactly as programmed, without any possibility of fraud, third-party interference or censorship,” the protocol added, indicating that they can be issued “for virtually anything: cryptocurrency, equity in a company, voting rights in DAO, and more”.
“DeFi is coming to @Bitcoin… And we’re so excited to be a part of that movement,” @punk3700 said.
Bitcoin is part of DeFi
The deployment of AMM smart contracts on Bitcoin marks its official appearance as a smart chain, regardless of whether its creators and most active supporters planned to use it as such.
Until the introduction of the Ordinals protocol late last year, which introduced text and image-based inscriptions to the Bitcoin blockchain, the BRC-20 token standard in March, and now smart contracts, Bitcoin’s use in decentralized finance (DeFi) was limited.
Tokenized versions of cryptocurrencies, such as Wrapped Bitcoin ( WBTC ) on the Ethereum blockchain, have tried with mixed success to unlock the DeFi potential of the world’s largest cryptocurrency.
Also, there’s been a lot of excitement lately about smart contract-enabled Layer 2 Bitcoin scaling solutions like Stacks .
But the Trustless Market protocol may well be the first of a Cambrian explosion of new dApps to be deployed directly on the Bitcoin blockchain.
And there is certainly a demand for Bitcoin DeFi.
According to @punk3700, the Trustless Market has already surpassed $500,000 in Bitcoin just three days after the protocol was rolled out.
Meanwhile, the market cap of BRC-20 (regular) tokens recently topped $1 billion, though it has since fallen to around $500 million, according to BRC-20.io .
Will Bitcoin Become a DeFi Powerhouse?
Its early days for DeFi on Bitcoin.
But @punk3700 compared the current moment to Uniswap in 2018 when the protocol was just launched on the Ethereum blockchain.
Since 2018, AMM smart contracts using DEXs like Ethereum have been at the forefront of the explosion of DeFi applications on Ethereum and other smart networks.
One obstacle to Bitcoin potentially going down this path is the blockchain’s lack of transaction processing capabilities, which also continues to hamper Ethereum.
However, unlike Ethereum, Bitcoin has no plans or roadmap for upgrading its protocol to increase transaction throughput.
As such, Layer 2 scaling solutions like Stacks could be key if Bitcoin, or at least the Bitcoin Sovereignty Zone (i.e. protocols like Stacks that rely on its underlying consensus mechanism), are to become a DeFi powerhouse.
