Author: Haotian

Seeing @bitsmiley_labs secure another $10M in funding to accelerate its vision of launching the new stablecoin bitUSD on BTC, what exactly does this BTCFi Stable Coin project, affectionately known as 'GRIN', aim to achieve? And what is its core technical framework? Why is the BTCFi market receiving such widespread acclaim? Let me share my thoughts:

1. The DeFi ecosystem of Ethereum originated from MakerDAO's DAI Algorithm stablecoin, and ultimately fermented on the governance incentive of the Compound lending platform, igniting a wave of Decentralized Finance summer. bitSmiley #SMILE in order to seize the first-mover advantage in the BTCFi market, has launched three major components by combining MakerDAO (DAI) and Compound (Lending) and other Decentralized Finance infrastructure:

1. bitUSD: an over-collateralization stablecoin protocol, similar to DAI. Users can deposit BTC into the bitSmiley Treasury to mint bitUSD. It adopts the bitRC20 standard for transparency and collaborates with ZetaChain to enable native cross-chain bridges, ensuring circulation across the entire chain environment.

2. bitLending: Native Trustless lending protocol, which uses peer-to-peer atomic swap technology to achieve transaction matching, while introducing an insurance system to optimize the shortcomings of traditional lending liquidation process;

3, Credit Default Swaps (CDS): Innovations in Derivatives protocol, integrating the slicing of Non-fungible Tokens CDS, while using an aggregated Bidding method to enhance the efficiency and fairness of the CDS market.

2）Its product components need further exploration to evaluate. Taking a comprehensive view, I mainly discuss two core technical points:

1. Native Cross-Chain Interaction in cooperation with @zetablockchain: ZetaChain is a POS blockchain built on the Cosmos SDK and Tendermint PBFT Consensus engine, providing a series of interoperability operations embedded in the entire chain environment. As BTC does not have Smart Contracts, it is possible to deploy a light node and perform longer signature operations based on the ECDSA Signature Algorithm. ZetaChain only needs to track and manage the UTXO on BTC to achieve secure Cross-Chain Interaction.

In addition, due to ZetaChain's Ominichain Smart Contract, which is designed for the entire chain environment, it can theoretically achieve transparent management of the entire chain assets through its full-chain circulation environment after solving the Cross-Chain Interaction problem with the BTC network.

2. bitRC20 standard, why does it look like the BRC20 inscription standard? Yes, bitUSD has drawn inspiration from the issuance of assets on the BTC Mainnet in the inscription paradigm. When users want to over-collateralize BTC, they can first bridge the assets to the bitSmiley official bridge. After the bitSmiley layer2 chain confirms the user's collateralized assets and completes Consensus verification, it will transmit the information to mint bitUSD on the BTC Mainnet.

Since traditional BRC20 coin minting requires pre-set deployment of the total supply, bitRC20 introduces the operations of Mint and Burn for the Stable Coin scenario to meet the dynamic adjustment of supply needs. This is actually the significance of the indexer, and this alternative coin issuance method is easier to obtain practical application and empowerment for projects.

Above.

In the end, it is not difficult to see why mainstream capital is rushing to enter BTCFi, and infrastructure providers like bitSmiley are also eager to layout in Decentralized Finance.

On the one hand, everyone is focusing on the huge potential increase in assets in the BTCFi market. Calculated based on the current total lock-up of 1.6 billion US dollars on the BTC network, it only accounts for 0.14% of the total Market Cap of BTC, compared to assets locked in networks such as ETH and Solana, there is still 50-100 times rise space, and the source of funds is not limited to on-chain, but also the off-chain demand behind the huge BTC+ETH ETF funds.

On the other hand, I believe that stablecoins, lending, derivatives and other practical applications that hold the core BTC assets will radiate throughout the entire chain environment after the landing application strategy is positioned, which will play a role in revitalizing and leading innovation for the decentralized finance model and users of the entire chain environment.