Startup Bitlayer is a Bitcoin Decentralized Finance (DeFi). backed by Franklin TempletonIn order to increase Bitcoin interoperability between multiple blockchain networks, launched its Smart Contract Bridge on Mainnet.
According to the company, BitVM is a bridge. “trust-minimized bridging solution for Bitcoin holders.” The deposit of Bitcoin is possible.BTC) into a smart contract, where it is held in escrow and converted into Peg-BTC (YBTC), a tokenized version of Bitcoin that can interact with smart contract platforms.
Bitlayer says that Peg BTC facilitates programmability as well as crosschain compatibility. The company already has partnerships in place to integrate its bridge into networks such as Sui Base and Arbitrum.
The Bitlayer spokesperson confirmed to Cointelegraph the purpose of this new bridge. “complement Bitcoin’s DeFi ecosystem by making native BTC liquidity accessible on networks that support smart contracts and more complex applications, without requiring changes to Bitcoin’s base layer.”
Hackers have been targeting crosschain bridges because of exploitable weaknesses. In 2022, a hacker stole $321 million from a Wormhole bridgeThe amount recovered was over $225 millions.
Bitlayer says that the bridge it built was based on trust assumptions from previous models in order to improve security. BitVM relies on a single-signer trust model.
Related: A beginner’s guide to the Bitcoin Taproot upgrade
Bitcoin DeFi protocols rise following Taproot Inscriptions
Decentralized Finance Protocols are gaining popularity on the oldest public blockchain in the world. While Ethereum and Solana have been more popular for their decentralized nature, this blockchain is more suited to DeFi. These services have been a big draw for many Bitcoin users, as the possibility of earning returns on their coin has appealed to them.
Bitlayer is competing with BabylonChain in the Bitcoin DeFi market. BabylonChain uses a Proof-of-Stake protocol, which allows investors to stake Bitcoin. Stacks rewards Bitcoin Miners.
Bitlayer Protocol is available from Tuesday has In June, $384,000,000 in value was locked onto the blockchain. This generated $1.7 million of fees. Babylon Protocol has TVL has a greater value, $5.2 Billion is locked into the network.
Around 30 DeFi initiatives are now being built within the Bitcoin Ecosystem. This trend is accelerated due to two key developments, the Taproot Upgrade and Inscriptions.
Taproot was implemented in November of 2021 and enhanced Bitcoin scripting, opening the door to more privacy-focused, scaleable applications.
The Ordinals protocol, launched in early 2023 and popularized by Inscriptions allowed users embed any data including code or images directly into the BTC network. This opened up new uses of Bitcoin.
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Source: cointelegraph.com
