Since the release of the Bitcoin white paper by Satoshi Nakamoto in 2009, Bitcoin has been hailed as “digital gold” and has held an unshakable position in the field of cryptocurrency. Its decentralization, scarcity, and security have enhanced its attractiveness as a long-term store of value.
In contrast, since its launch in 2015, Ethereum has rapidly become another important pillar in the blockchain industry, with its powerful smart contract platform and flexible development environment. Ethereum’s smart contract functionality provides unlimited possibilities for the development of decentralized applications (dApps), leading to significant achievements in decentralized finance (DeFi) and non-fungible tokens (NFTs).
Despite Bitcoin’s important position in the crypto world, the Bitcoin ecosystem still faces some unique challenges compared to Ethereum:
1. Lack of a smart contract platform: The lack of a powerful smart contract platform in the Bitcoin ecosystem limits the development of complex dApps and DeFi.
2. Underutilization of assets: Many Bitcoin holders face the challenge of their assets not being fully utilized, leading to missed opportunities in emerging industries such as DeFi and NFTs.
3. Fragmentation of BTC in various blockchain networks: Bitcoin is scattered across multiple independent blockchain networks and layer-two solutions, potentially lacking effective interoperability and compatibility, limiting the application and liquidity of Bitcoin.
Despite Bitcoin’s relatively simple original design, its community and developers are constantly pushing for technological innovation to enhance its functionality and usability. The SegWit update addressed transaction malleability issues and increased block capacity, while the Taproot update introduced Schnorr signature technology, enhancing transaction privacy and efficiency. The BRC-20 standard enables the creation and trading of tokenized assets on the Bitcoin network, expanding its use cases and strengthening its competitiveness in DeFi and other blockchain applications, providing potential and a foundation for Bitcoin’s financial applications.
Entrepreneurs are continuing to explore new solutions and applications, with Bitcoin liquidity gradually improving. GeekCartel aims to lead the understanding of these projects’ development and technical principles, helping users better utilize Bitcoin assets and explore more application scenarios. Note: This article does not constitute investment advice.
Bitcoin Liquidity Exploration: A New Path to Application and Value
Babylon: Bringing Bitcoin Security to the PoS Ecosystem
Technical Implementation:
Babylon is a Layer 1 PoS chain based on the Cosmos SDK. It proposes a Bitcoin staking protocol designed as a modular plugin for various PoS consensus algorithms, providing a restaking protocol. Babylon can transfer Bitcoin security to many PoS chains (such as Cosmos, Binance Smart Chain, Polkadot, Polygon, and other interoperable blockchains), creating a stronger and unified ecosystem.
The Bitcoin timestamp protocol and Bitcoin staking protocol are used to achieve Bitcoin security sharing. The Bitcoin timestamp protocol enhances the security of PoS protocols by sending the hash value and validator signature of PoS blocks to the Bitcoin blockchain. The Bitcoin staking protocol allows Bitcoin holders to stake their idle Bitcoin, increasing the security of PoS chains and providing opportunities for profit.
Project Progress:
Babylon is currently in the testnet phase and has announced partnerships with projects at the forefront of the Bitcoin revolution, such as Ankr, Lorenzo Protocol, B² Network, Nubit, Yala, Nomic, Automata, Glacier, and Solv.
Investment Information:
On December 6, 2023, Babylon raised a $18 million Series A led by Polychain Capital and Hack VC, with other participating institutions including Framework Venture, Breyer Capital, Symbolic, and GeekCartel. In February 2024, Binance Labs announced an investment in Babylon, with the investment amount undisclosed. On May 30, 2024, Babylon announced investments from Coinbase Ventures and P2P Capital, with the investment amount undisclosed.
TokenCity: Bitcoin Liquidity Solution for the DeFi Ecosystem
Technical Implementation:
TokenCity is a cross-chain protocol aimed at bringing Bitcoin into the DeFi ecosystem, enhancing Bitcoin liquidity and availability through techniques such as multi-chain bridging and liquidity pools. Its core functions include cross-chain bridging, liquidity pools, and yield aggregators.
Project Progress:
TokenCity has launched its cross-chain bridging and liquidity pool services, supporting cross-chain operations between Bitcoin and Ethereum, as well as the Binance Smart Chain.
Investment Information:
In October 2023, TokenCity completed a $15 million Series A led by Pantera Capital, with other participating institutions including Coinbase Ventures, a16z, and Sequoia Capital. In January 2024, TokenCity announced a $20 million Series B led by Alameda Research, with other participating institutions including Galaxy Digital, Jump Trading, and Paradigm.
Qredo: Building an Institutional-Grade Bitcoin Custody and Trading Platform
Technical Implementation:
Qredo is an institutional-grade Bitcoin custody and trading platform that provides efficient and secure asset management and trading services. Its core functions include decentralized custody, instant settlement, and privacy protection.
Project Progress:
Qredo has launched its decentralized custody and instant settlement services and has gained recognition from some large institutional clients. The platform plans to further expand its service range to cover more crypto assets and financial services.
Investment Information:
In July 2023, Qredo completed a $25 million Series A led by Goldman Sachs, with other participating institutions including Citadel Securities, BitMEX, and Digital Currency Group. In March 2024, Qredo announced a $35 million Series B led by Fidelity Investments, with other participating institutions including BlackRock, Morgan Stanley, and Andreessen Horowitz.
Conclusion
With the development of technology and the emergence of innovation, Bitcoin liquidity is gradually improving. Projects such as Babylon, TokenCity, and Qredo are exploring and realizing the broader application of Bitcoin in the DeFi and PoS ecosystems through different technological means. The Bitcoin ecosystem is expanding, and its position as “digital gold” is further solidifying. With the continued development of these projects and the emergence of more innovations, the liquidity and application prospects of Bitcoin will become even more promising.