The role of Bitcoin is officially in transition, and this transformation is filled with potential. What was once a simple store of value is now evolving into a potential monetary powerhouse, complete with decentralized finance applications that have the capabilities to push BTC to the forefront of the financial world.
Bitcoin improvements, such as Taproot and SegWit, have allowed developers to build on top of the Bitcoin network itself—all without permission for hard fork upgrades. As a result, projects are emerging that integrate native Bitcoin through multiple BTC variants, turning BTC into a multi-chain ecosystem and birthing BTCfi (Bitcoin DeFi).
Bitcoin’s liquidity is in the trillions, and layer-2s and sidechains are building on top of the network to unlock this liquidity. However, the siloed nature of these L2s and sidechains is stifling the growth of BTCfi, preventing the sector from reaching its full potential.
This is where cross-chain liquidity for BTC steps in.
Let’s examine Bitcoin’s role in a multi-chain BTCfi world and explain how cross-chain liquidity is essential to pushing the boundaries of what’s possible on the network.
Bitcoin’s Role in a Multi-Chain BTCfi World
With the number of BTC variants rising, a new BTCfi world is emerging as the Bitcoin Season 2 narrative begins to take hold with crypto enthusiasts beginning to realize Bitcoin’s expansive potential. However, the problem of interoperability between these BTCfi projects is still a hurdle that needs to be overcome.
Over the past few years, a wide range of developers have flocked to the Bitcoin network, developing solutions that either enhance Bitcoin’s scalability or introduce programmability to the network. Most of these new L2s or sidechains introduce their own variants of BTC, which can sit on multiple networks (e.g., Ethereum, Avalanche, Base, etc.). Unfortunately, the lack of interoperability causes stickiness within these L2s and sidechains, causing siloed liquidity that’s difficult to move around.
While BTC might be evolving, it will only reach its full potential once liquidity can be easily moved across the multi-chain BTCfi world.
The Importance of Cross-Chain Liquidity for BTCfi: A Necessity, Not a Luxury
Cross-chain liquidity will be essential for the Total Value Locked (TVL) on BTCfi to close the gap on Ethereum’s decentralized finance Total Value Locked (DeFi TVL).
Cross-chain liquidity is a concept where value can be easily transferred (or shared) between different blockchains. It allows users and developers to choose how they want to interact with BTCfi without being constrained to the liquidity on one network. As a result, the economic activity on one BTCfi project can be seamlessly expanded to another BTCfi network on a separate blockchain with a seamless cross-chain liquidity solution.
An effective, interoperable cross-chain liquidity solution will strengthen the entire Web3 industry by bringing BTCfi’s liquidity together.
Cross-chain liquidity is not just a solution; it’s a catalyst for growth and adoption that’s a necessity, not a luxury. It will accelerate growth and adoption while enhancing the user experience by reducing the friction involved in moving between chains. It can help adoption by streamlining the user onboarding process, allowing users to freely access different BTCfi protocols across blockchain networks to create more value for users.
As a result, cross-chain liquidity for BTCfi creates the following extraordinary flywheel effect:
Reduced barriers of entry → More users → More liquidity flowing into BTCfi → Larger lending, staking, and yield farming (DeFi) opportunities → More users → More liquidity flowing into BTCfi.
Future of Bitcoin in a Multi-chain World & Persistence One vision
Persistence One is on a mission to bring cross-chain liquidity to the BTCfi world through a BTC interoperability solution that leverages cross-chain intents. We want to become the number one venue for trading all forms of BTC across multiple chains.
If you haven’t heard, intents involve users specifying the outcome of their trade, allowing experts (called Solvers) to come and fulfill the intent. The user simply specifies the “what” of the trade (e.g., “I want to swap mBTC to sBTC”), and the Solver will utilize its unified liquidity across multiple sources to complete the trade.
Our solution will provide user-friendly cross-chain swapping for any type of BTC asset. Best of all, as we use an intent-based solution, there will be no slippage during cross-chain BTC swaps as Solvers will take on the finality responsibility for each intent.
With this solution, Persistence One hopes to provide the necessary infrastructure to help the BTCfi world reach its full potential by streamlining the process of moving BTC variants around between ecosystems and reducing the barriers to entry for users looking to hunt for opportunities on multiple networks.
About Persistence One
Persistence One is building a Bitcoin interoperability solution to enable cross-chain BTC swaps across Bitcoin Layer 2s.
The rapid rollout of Bitcoin L2s and side chains has led to fragmentation, hurting BTCfi scalability. Using the power of intents, Persistence One will enable users to move assets across Bitcoin Layer 2s more efficiently than traditional bridging, offering fast, secure, zero-slippage cross-chain swaps.
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