jakiro
Author: Phyrex Source: X, @Phyrex_Ni
The in-depth discussion on BTCFi is very unfavorable for ordinary investors to read. The content is very boring, with almost no investment password, and it is not suitable for most investors, and there is no effect of getting rich.
Very happy Recently, more and more friends have been paying attention to the field of BTCFi. I receive inquiries from many people in the industry almost every day, especially for the definition of BTCFi, everyone is very confused, so what exactly is it.Is it BTCFi and what problems can BTCFi solve?Let’s talk together.
First: Is it native Bitcoin
This question seems stupid, but if you think about it carefully, you may feel cold sweat. Many friends think that #BTC’s layer 2 network, or the pledge of BTC, is part of BTCFi, and the most critical core here is that the assets supported areNative BTC or mapped BTC.
The reason why this question is raised is who controls the BTC core assets in the BTC ecosystem and whether the control method is safe enough. Many friends believe that sufficient decentralization is the most important, but in finance.Security in the field is often a necessary condition, or even a primary condition, for large funds to enter.
Speaking human words is where the BTC is hosted? Now almost all the BTCs in the decentralized BTCFi protocols are similar to WBTC. While they are controversial, the recognition of WBTC is the biggest problem.We can talk about this later, but what we need to know is that when SAB121 is passed, the only BTC that the bank can support is native BTC.
Therefore, it can be concluded that in the actual application of BTCFi, BTC, which is not native, cannot guarantee security, nor can it guarantee acceptance and liquidity. Especially after SAB121, Bank CRC is the largest BTCFiThe “layer 2 network” is the “BTC TOKEN” that can be circulated in the blockchain.
Second: Is the only native Bitcoin the only one?
The answer is no. In different environments, “native” is actually understood by different understandings. In the world of blockchain, BTC=BTC is undoubtedly BTC. This is what we said earlier. Banks only recognize native BTC.The reason, but in the financial world, BTC’s financial assets are also BTC in compliance.
For example, although BTC’s spot ETFs are not available as actual assets in mainstream U.S. banks, the law has indeed given compliance to these ETF assets. For example, BlackRock’s $IBIT is an asset that tracks BTC prices, and evenUnder the current delivery conditions, BTC-based delivery is not supported, but because there is enough BTC spot as acceptance assets, it needs to correspond to ETF assets, so it can be considered that spot ETF itself is BTC.
Secondly, whether it is BTC spot or BTC spot ETF, it is not directly purchased by all investment institutions, especially in US stock trading, Bitcoin cannot be directly traded, so the $MSTR with a large amount of BTC in its market value can be regarded as US stocks.The only way to comply with BTC.
Before SAB121 was passed, not only could BTC itself not be able to custody and mortgage loans in the bank, but even the assets of BTC spot ETFs could not be refinancing, but MSTR could be refinancing plans such as custody and mortgage loans in the bank.
Therefore, native BTC should be an asset that can be linked to BTC in the world of legal recognition and blockchain.Among them, the significance of legal recognition is very important, which is one of the most important thresholds for the entry of large funds. Only with sufficient compliance can more funds be willing to enter.This is also the reason why a large amount of funds poured in after the spot ETF was passed. Compliance is one of the necessary conditions for BTCFi.
Third: Who will provide the liquidity of pledged Bitcoin?
This question feels even more stupid, but if you think about it carefully, the current pledged BTC provides stablecoins on the basis of currency circles. In addition to certain specific channels, can these stablecoins safely enter Web2?In the world, speaking people means you want to make seamless switching by pledging assets obtained by BTC in the Web2 world.
The answer is yes, but it is necessary to provide a complete financial proof. The larger the asset, the higher the risk it needs to face. In the current BTCFi ecosystem, if the asset acceptance is thrown away, it is like a flower in the mirror and a moon in the water.
but!but!but!There is one of the most important issues here. Almost all BTC lending agreements are mortgaged for BTC, and there is an agreement or LP to provide funds. The borrower mortgages BTC to obtain funds. The fund provider uses BTC as a guarantee and obtains interest income from the loaned funds.Is this true?
So for investors who have BTC in their hands but are not like those who sell BTC, does their BTC have no liquidity? This is not the true meaning of BTCFi. BTCFi should be given to all BTC holders.Providing liquidity to earn profits should not be just mortgage loans.
To be honest, for liquidity providers, the web2 or web3 method is not the most important. Both need to solve the KYC problem of assets, but for current liquidity, only loans based on funds are available.It does not mean that it provides liquidity to BTC.
Fourth: How to provide liquidity to Bitcoin
The essence of liquidity is not mortgage lending. In fact, there is one of the best liquidity providers in the currency circle, which is Curve. The Curve mechanism itself is the central bank’s mechanism. If you imagine 3 Pools in Curve as in the real world, 3What Pool does is accepting fiat currencies between different countries, rather than mortgage loans.
Including Uniswap, it actually provides liquidity solutions, but our default liquidity is a buying and selling relationship between assets and stablecoins. Therefore, in fact, the liquidity relationship of BTCFi should not be just a borrowing relationship, but is based on BTC itself.Liquidity acceptance, only after assetizing BTC and then accepting between assets can allow more investors holding BTC to enjoy the benefits of holding BTC, rather than just selling or pledging.
This method really provides the source of benefits for BTC. In the #BTCFi principle I designed, #BTC $MSTR and $IBIT are both native BTC. Whether it is injected with BTC, MSTR or IBIT, they are all given to BTC.The relationship between liquidity is not just mortgage loans, but helps users convert into different BTC under different circumstances.
So whether it is BTC, MSTR or IBIT providers can obtain Fi benefits without reducing the share of “BTC”, but to some extent, it is like Curve 3 Pool, combining Bitcoin MSTR and IBIT togetherA liquidity pool is formed.
Injecting BTC is equivalent to obtaining 33.33% BTC, 33.33% MSTR and 33.33% IBIT. Of course, it can also be directly exchanged for 100% BTC, 100% MSTR and 100% IBIT, and delivery is provided for users.Provides a financial tool that seamlessly switches between virtual and real assets.
Fifth: On the chain?Not on the link?If the rights are confirmed
If you don’t look at the previous one, you may also think it is a stupid question. How can you call a decentralized financial application without linking? But after carefully reading the previous content, will you have a new understanding of BTCFi?Do you think that going on the chain has no practical significance? After all, MSTR and IBIT are not native assets on the chain, and according to SEC regulations, there is no way to directly issue tokens for MSTR and IBIT on the chain.
But in fact, it is still necessary to go on the chain, especially to provide small-scale investors with hedging and liquidity solutions. In addition, putting BTC on the “bills” of the bank on the chain is the verification solution for BTCFi.Of course, in this protocol, it no longer needs to support BTC or BTC layer 2 network. As long as there is a “native BTC” ticket, it is enough. So in fact, BTCFi does not need to be on BTC-related networks. This principle is likeIt doesn’t have to be USDC in #Ethereum. As long as it is a native asset, it’s the same everywhere.
Of course, if you can really provide BTC’s native assets, there will be no problem in the BTC network.
Sixth: The relationship between BTCFi and RWA and RWAFi
With further research on BTCFi, I guess many friends can understand that in fact, the underlying logic of BTCFi is RWA, and RWA becomes RWAFi through the RWA chaining, so BTCFi is essentially a part of RWA, but it is more than the current one.The idea of RWA will be more complicated. If it is just the traditional way of U.S. stocks and U.S. bonds, then BTCFi is a bridge that integrates virtual assets and real assets, that is, virtual assets and real assets.
The most interesting thing is that both virtual assets and real assets are the same subject matter. It is precisely because of this that the integration between BTCFi and RWAFi is formed, especially in the issue of compliance, the current compliance in the United StatesIt will be a little more difficult under the system, but it will be relatively simpler for Singapore, Switzerland, Germany, etc.
