Mon, 11 Apr 2022 12:23:17 +0000
In recent years, stablecoins have become wildly popular throughout the crypto universe due to their inherent feature that safeguards investors from the volatility of the crypto market. They are used for various use cases and exist across different blockchain platforms.
Until recently, stablecoins, decentralized finance (DeFi), non-fungible tokens (NFTs), and other similar smart contract-powered primitives weren’t available on the Bitcoin network. However, with the emergence of RSK, the first smart contract platform secured by the Bitcoin network, Bitcoin die-hards can now access the limitless opportunities in DeFi, including stablecoins, without needing to switch to another blockchain.
Bitcoin (BTC) is currently considered the most liquid cryptocurrency in existence. It already has the largest market capitalization and the largest user community. Accordingly, by using BTC as collateral, stablecoins can leverage the inherent features of the Bitcoin blockchain, which include decentralization, censorship resistance, immutability, and unparalleled security. Additionally, with BTC as collateral, the counterparty risks associated with stablecoins can also be minimized to an extent.
RSK is one of the platforms that level the playing field for Bitcoin enthusiasts as open finance (OpFi) continues to grow. There was a significant increase in the number of users joining RSK’s smart contract ecosystem in 2021, sending the amount of BTC pegged into RSK from 546 to 2,520 – a promising development when considering that DeFi is still at its nascent stage on the Bitcoin blockchain.
To further expand its range of DeFi services, RSK has also launched an interoperability bridge with Ethereum, allowing a two-way transfer of any token between the RSK and Ethereum ecosystems. As a result, Ethereum users can seamlessly transact with rBTC, thus gaining indirect exposure to the Bitcoin DeFi ecosystem. This bridge will also work in favor of RSK users, especially those using Ethereum-based stablecoins such as DAI.
The Bitcoin DeFi movement is considered the next big leap for DeFi 2.0. In this context, RSK, with its suite of stablecoins and DeFi products, paired with the Bitcoin network’s time-tested security and liquidity, has positioned itself as the go-to solution for developers looking for alternatives to Ethereum’s rising problems.
On a technical level, RSK offers full EVM (Ethereum Virtual Machine) compatibility, meaning developers can seamlessly port their Solidity-based dApps (decentralized applications) to Bitcoin without making any significant changes to the underlying code. The two-way peg with Bitcoin enables developers to leverage the features of both RSK and Bitcoin networks.
When it comes to scalability, Ethereum usually offers a throughput of 30 TPS (transactions per second), which can go higher depending on the network congestion. At the same time, RSK offers up to 100 TPS without reducing storage space or compromising decentralization. Likewise, in terms of gas fees, RSK charges as much as 42x lower than the average gas fees of Ethereum.
In terms of security, most blockchain networks that follow the PoS (Proof-of-Stake) consensus mechanism are prone to cyber attacks, as is evident from the recent string of hacks across DeFi platforms. On the other hand, the Bitcoin network ranks among the most secure because taking over the Bitcoin network involves one party commanding at least 51% of the hash rate. This is viewed as increasingly difficult as the hashrate continues to rise. RSK is secured by around 50% of the total hashrate of the Bitcoin network, which makes it the most secure smart contract platform in terms of defending against 51% attacks.
Underlining the benefits of using stablecoins pegged with BTC, Diego Gutierrez Zaldivar, Co-founder of RSK and CEO of IOVlabs, explains, “Bitcoin is the most liquid crypto asset, and it’s recognized as a store of value. Therefore I suppose it is the best form of collateral that you can use in DeFi protocols. If you use a stablecoin such as USDT, you’re prone to third-party risk.
RSK’s strength lies in a combination of features that we can potentially achieve: top security, high decentralization, high scalability, and low cost.”
So far, the RSK ecosystem has amassed a TVL (Total Value Locked) of more than $134 million, hosting some of the most high-performing stablecoin projects like MoneyOnChain (MOC), Sovryn, and BabelFish, among others.
The Dollar on Chain (DoC) stablecoin is among the primary assets offered by MoneyOnChain. It is collateralized at a 1:1 ratio with BTC, positioning it among the best collateral since BTC’s liquidity backs it. Then there’s the RIF Dollar on Chain (RDOC), one of the primary assets offered by the RIF On Chain DeFi platform. RDOC uses the RIF token as collateral and is pegged at a 1:1 ratio with the US Dollar.
The RSK ecosystem is also home to XUSD, the USD-pegged stablecoin of the cross-chain protocol BabelFish. The XUSD stablecoin is used as a decentralized aggregator and distributor of multiple stablecoins and can be exchanged or redeemed at a 1:1 ratio with any other stablecoin as guaranteed by the underlying smart contract.
With RSK’s rDAI stablecoin emerging as an alternative to Ethereum’s high transaction fees, you can convert DAI for much lower gas fees (approximately 15 cents per transaction), making it about 80 times cheaper than transacting DAI over the Ethereum network. Besides these features, the RSK ecosystem is also home to the BRZ stablecoin, which is pegged at 1:1 with the Brazilian Real (BRL).
On top of this, Blindex, a multi-currency stablecoin DeFi platform, is also rolling out a wide range of stablecoins pegged to individual assets utilizing RSK smart contracts. Commonly known as BD-Stables, these stablecoins are pegged 1:1 with the underlying currency. For instance, if a BD-Stable is pegged with USD, it is represented as bUSD. For the Australian Dollar, it is bAUD, bEUR for the Euro, bJPY for the Japanese Yen, and so forth.
Thanks to emerging technologies, the DeFi ecosystem has undergone several transformations in the last couple of years. Stablecoins, as one of the strongest pillars of the crypto market, will play a critical role in the ongoing transition to DeFi 2.0, especially now as they have finally found their way into the Bitcoin ecosystem, thanks to RSK’s smart contract capabilities.