Worlds collide at Bitcoin-based DeFi project — Nothing is impossible

Bit­coin (BTC) has grown from a small project to a fron­trun­ner for a pos­si­ble glob­al cur­ren­cy thanks to its unri­valed mar­ket cap­i­tal­iza­tion, unmatched liq­uid­i­ty pool and reli­able infra­struc­ture. The long-term ben­e­fits of Bit­coin have ensured its place in the bal­ance sheets of indus­try giants like Tes­la and MicroS­trat­e­gy as well as some small nation-states, no mat­ter the pass­ing mar­ket conditions.

It’s no won­der that all big play­ers in the decen­tral­ized finance (DeFi) space are long­ing for a plunge in Bitcoin’s huge pool of liq­uid­i­ty. How­ev­er, since DeFi pro­to­cols were built on Ethereum or oth­er blockchains, they lack native com­pat­i­bil­i­ty with the Bit­coin net­work, mak­ing it more dif­fi­cult to tap into the BTC liquidity.

Sev­er­al projects have come up with workarounds to access Bit­coin liq­uid­i­ty over the years, with the most promi­nent ones being wrapped ver­sions of BTC and token bridges. Numer­ous reports high­light­ed that token bridges are too vul­ner­a­ble to act as DeFi’s gate­way to Bit­coin liq­uid­i­ty, with cross-chain bridges account­ing for half of all DeFi exploits.

DeFi on Bitcoin: A tricky task

As DeFi strug­gles to find an ide­al way to access Bit­coin liq­uid­i­ty, BTC hold­ers also want their long-term invest­ment to reach its full poten­tial with­out intro­duc­ing added vul­ner­a­bil­i­ties or rely­ing on a cen­tral­ized third par­ty. Even with­out the her­culean task involved in the tech­ni­cal front, the idea of using the base lay­er of the Bit­coin blockchain for any­thing oth­er than peer-to-peer fund trans­fers trig­gered mixed reac­tions from the Bit­coin community.

Despite the mis­con­cep­tion that Bit­coin is lim­it­ed to sim­ple trans­ac­tions, con­tracts have been pub­lished with Bit­coin script. Users have pub­lished the first NFTs, and some even man­aged to play a retro com­put­er game on the Bit­coin base lay­er through the Ordi­nals pro­to­col. Casey Rodar­mor, the cre­ator of Ordi­nals, described it as a way to “Make Bit­coin fun again.”

How­ev­er, not every­one prefers using the orig­i­nal blockchain in such a way. Bit­coin OGs took no time to weigh in on the top­ic, point­ing out that the base lay­er is not opti­mized for uses oth­er than P2P fund trans­fers. Block­stream CEO Adam Back argued in a tweet that, unless Ordi­nals were used for some­thing effi­cient, “it’s anoth­er proof of con­sump­tion of block-space thingy.”

A poten­tial solu­tion should address the Bit­coin community’s con­cerns about blockchain con­ges­tion with­out intro­duc­ing new vul­ner­a­bil­i­ties or rely­ing on third-par­ty cus­tody. Mint­lay­er, a Layer‑2 solu­tion root­ed in the estab­lished net­work of the Bit­coin blockchain, aims to pro­vide an accept­able and cred­i­ble answer for all parties.

Reliable DeFi? Bitcoin fixes this

The founders of Mint­lay­er designed the pro­to­col to be as inter­op­er­a­ble with the base Bit­coin lay­er as pos­si­ble. It uses an unspent trans­ac­tion out­put (UTXO) account­ing sys­tem, much like the Bit­coin blockchain, for supe­ri­or secu­ri­ty and robust­ness. As a Layer‑2 solu­tion built on the Bit­coin net­work, Mint­lay­er removes the need for wrapped tokens or token bridges — the pri­ma­ry attack vec­tors for DeFi hacks — and instead uses atom­ic swaps for 1:1 trans­ac­tions from native BTC to tokens on the Mint­lay­er blockchain.

Mint­lay­er enables Bit­coin hold­ers to access all types of DeFi instru­ments as well as a vast ecosys­tem of decen­tral­ized apps with their native BTC.

Instead of com­pet­ing with Bit­coin, Mint­lay­er aims to empow­er the orig­i­nal cryp­tocur­ren­cy by pro­vid­ing a sound infra­struc­ture that expands the use of BTC to new hori­zons. Speak­ing about build­ing a decen­tral­ized pro­to­col to pro­vide peo­ple with new devel­op­ment oppor­tu­ni­ties, Mintlayer’s CEO Enri­co Rub­boli said: “Bit­coin is dig­i­tal gold, and Mint­lay­er is devel­oped to run on the dig­i­tal gold stan­dard. We believe that a tru­ly decen­tral­ized pro­to­col that is user-friend­ly and high­ly inter­op­er­a­ble with the largest pool of dig­i­tal liq­uid­i­ty is the future of decen­tral­ized finance.”

Expanding Bitcoin’s reach

Going into the details of the project, devel­op­ers explain that users are not required to hold ML, the native token of Mint­lay­er, to pay trans­ac­tion fees. Users can pay for trans­ac­tions with any token a block sign­er accepts. To achieve auton­o­my, pri­va­cy and self-cus­tody — the key pil­lars of Bit­coin phi­los­o­phy — the Mint­lay­er soft­ware is opti­mized to the point that users will be able to run a full node on an aver­age desk­top computer.

Aside from remov­ing the fric­tion around using Bit­coin to con­duct a finan­cial trans­ac­tion, Mint­lay­er also seeks to make using BTC for non-finan­cial projects with­in the DeFi sim­ple, secure and seam­less. By pro­vid­ing a uni­fy­ing solu­tion to the high­ly-frag­ment­ed state of decen­tral­ized finance, Mint­lay­er encour­ages devel­op­ers and users to focus on the growth of a tru­ly inclu­sive, fair, and trans­par­ent finan­cial ecosys­tem for the ben­e­fit of everyone.

The token gen­er­a­tion event (TGE) for Mintlayer’s native token ML is sched­uled for March 21, 2023. The test­net launch is expect­ed for Q2 short­ly there­after, fol­lowed by the main­net launch in the third quar­ter. The new­ly-launched mobile wal­let and brows­er exten­sion for Mint­lay­er are also avail­able for download.

Learn more about Mintlayer