Money on Chain, the BTC-backed stablecoin issuer based on the RSK platform, is expanding its offering into the decentralized exchange space with the launch of TEX. Building on the 2020 momentum for all things DeFi, the TEX offers users automated token swaps using a unique trading mechanism inspired by the London Gold Fix. RSK has been a huge proponent of Bitcoin-based DeFi, and the TEX launch represents a further expansion of decentralized finance within the Bitcoin ecosystem.
Unlike many recent DEX launches, which are effectively clones of Uniswap’s liquidity pool mechanism, the TEX is based on an order book. Order execution doesn’t happen instantly, as it occurs on ticks. Tick movements occur every few minutes based on market activity, allowing the order book to form a price based on matches between buyers and sellers.
The pricing mechanism is an iteration on the London Gold Fix, which sets the spot price of one troy ounce of gold twice each day.
The TEX is already live, allowing traders to place limit orders and market maker orders. In a market maker order, the trader specifies a percentage difference from their limit price with a fair price. The TEX then obtains a fair price either using an oracle or based on the last tick.
BTC Supply Under Pressure?
RSK is built as a side chain of the Bitcoin blockchain, offering second-layer smart contract functionality and supporting layer 3 platform RIF, which provides a developer tool suite. IOVLabs, which operates the technology stack, has been nurturing developments in the Bitcoin DeFi space for many years. Along with Money on Chain’s expansion, RSK itself has launched an interoperability bridge to Ethereum, enabling developers to send their tokens back and forth between the Ethereum and Bitcoin ecosystems. Most recently, the bridge has supported the transfer of DAI from Ethereum into RSK.
Bitcoin has been on a bullish rampage recently, with prices edging ever closer to their all-time high of December 2017. Analysts at Pantera Capital have attributed this surge to a supply squeeze induced by PayPal’s entry into the cryptocurrency markets.
However, it could also be the case that demand for "wrapped" BTC assets in DeFi, along with a decrease in supply resulting from May’s halving event, are also contributing to market forces. According to DeFi Pulse, BTC locked in DeFi has skyrocketed over recent months to a current total of around 170,000 BTCs with a value of over $3B. Ethereum-based WBTC accounts for a significant proportion of this.
Now, Binance is eyeing up Bitcoin’s value following the launch of its Binance Smart Chain over the summer. In a recent blog post, the exchange giant revived the concept of BTCB, a wrapped version of Bitcoin based on the Binance Smart Chain. However, although Binance positions BTCB as an entry point to DeFi, the company isn’t indulging in any pretense that BTCB is decentralized. The blog post explains that those using BTCB are engaging in a "centralized and trust-based" model, with Binance as the sole BTCB issuer.
Therefore, the entry of other applications and platforms looking to lock up BTC in wrapped tokens could put further pressure on supply, keeping Bitcoin firmly in bull territory for a while.