First Bitcoin-backed Stablecoin Launches on RSK Network
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Until now, DeFi has been predominantly focused on Ethereum, but it seems that it’s about to change. Money on Chain has now launched a decentralized stablecoin protocol on RSK, the smart contract platform powered by the Bitcoin blockchain. It comprises a two-token system designed to appeal to holders of Bitcoin with different appetites for risk.

The first token is a stablecoin pegged to the value of the US dollar, called Dollar on Chain (ticker DOC.) DOC is fully collateralized by reserves of BTC, in a similar way that Tether is underpinned by US dollar reserves. However, DOC will be stable due to its dollar peg and free of Bitcoin’s volatility. Therefore, it can serve as a medium of exchange, a unit of account, and a store of value.

The second token, called BitPRO, takes on the volatility risk associated with having the DOC pegged to the dollar but backed by Bitcoin. Although holders of this token will expose themselves to price swings, Money on Chain foresees that this volatility can form the basis of passive income. They’ll receive shares in fees collected by the platform and be able to sell volatility as leverage to traders on decentralized crypto derivatives exchanges.

“This is a very important step towards a more open and transparent financial system,” said CEO and Co-founder, Max Cajurzaa. “The Money on Chain protocol enables other projects to develop lending, credit, and advanced trading for Bitcoin holders.”

Money on Chain is the first major project to be developed on the RSK platform, which has been steadily expanding its ecosystem since it was taken over by IOV Labs a year ago.

DeFi Expanding to Bitcoin?

The DeFi space has evolved on the Ethereum blockchain, but there are signs that the movement is starting to spread beyond its original boundaries. As crypto’s biggest product, it seems almost necessary that Bitcoin features in DeFi if it’s to keep gaining traction. The Lightning Network, which enables instant payments using Bitcoin, has also been making strides lately.

Early in December, Bitfinex became the first exchange to offer Bitcoin deposits via the Lightning Network. A week after launching, Bitfinex CEO, Paolo Ardoino, reported that more than seven BTC ($52,000) had been deposited using the Lightning service, in around 800 transactions.

Elsewhere, reports emerged that a Japanese startup called Nayuta launched a Lightning-enabled wallet on the Android operating system. Users can send and receive instant Bitcoin payments using the wallet, which can also operate as a full Bitcoin node.

These developments are sure to be good news for supporters of the Lightning project. It has previously suffered various hiccups in development. For example, one user reported on Reddit that he had lost 4 BTC over the network, detailing the steps he had taken to recover the cryptocurrency by force-closing payment channels.

Before the user had reported the issue resolved, Hungarian researchers had cited the case in a paper, criticizing the Lightning Network for being “economically irrational.” The paper stated that either traffic or transaction fees, had to increase by “orders of magnitude” to make it economically viable.

Therefore, adoption by Bitfinex and the introduction of a dedicated wallet could help increase traffic sufficiently to overcome this challenge.

DeFi aggregator website DeFiPrime now lists 206 projects in total, 24 of which offer Bitcoin integration. Overall, it seems that Bitcoin does indeed have a bright future within the broader DeFi ecosystem.

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