BTCFi is a decentralized finance (DeFi) platform allowing Bitcoin holders to borrow, lend, and generate yields while maintaining their BTC holdings. It aims to provide revenue opportunities for BTC holders across various networks by enabling DeFi functionalities for Bitcoin.^[1][2][3]

Overview

BTCFi, introduced by Bifrost, launched a native Bitcoin staking service on April 17, 2024, following the unveiling of its testnet on April 11, 2024, and a pre-launch event on March 14, 2024. BTCFi operates on a decentralized protocol without intermediaries or custodians, anchored by BtcUSD, an over-collateralized stablecoin backed by Bitcoin.

BTCFi aims to enable Bitcoin holders to potentially earn passive income while retaining their BTC holdings. By collateralizing Bitcoin to mint BtcUSD, users gain access to DeFi opportunities. Offering decentralization, user-friendliness, and cross-chain capabilities, BTCFi seeks to simplify borrowing and lending processes for BTC holders.

Users can deposit BTC from various chains and potentially utilize BtcUSD in protocols across the Bifrost Network and other compatible platforms. With BTC as collateral, BtcUSD aims to maintain the decentralization inherent in Bitcoin, potentially ensuring stability and accessibility.

Moreover, BTCFi's integration with Bifrost seeks to provide full cross-chain functionality, enabling collateral and assets to potentially be utilized across different networks. Future plans include native BTC support, potentially enhancing BTCFi's cross-chain capabilities.^{[1][2][3][4][5][6][7]}

Decentralization

BTCFi, operating on the Bifrost Network, endeavors to uphold principles of decentralization and security. It strives to be among the pioneering fully decentralized collateralized debt positions (CDPs), utilizing Bitcoin as exclusive collateral, thus eliminating reliance on centralized intermediaries.

This approach aims to safeguard users' assets and minted BtcUSD from associated risks. By using Bitcoin as collateral, BTCFi aims to ensure that BtcUSD maintains Bitcoin's level of decentralization, providing stability in a stablecoin format.^[3][8]

User-Friendliness

BTCFi aims to streamline borrowing and lending for BTC holders by facilitating collateralization and minting of BtcUSD. Users have the option to integrate BTC from various networks, reducing transaction costs.

It offers competitive borrowing rates, providing stable BtcUSD loans at 3.5%, aiming to appeal to investors seeking to leverage BTC without risk.

With a focus on speed and efficiency, BTCFi enables quick staking of Bitcoin. Leveraging the high transactional rate of the Bifrost Network, it seeks to ensure faster execution compared to competitors. Its self-custodial nature grants users complete control over their BTC holdings, fostering trust and security.^[3][5][9]

Cross-Chain

BTCFi, powered by Bifrost, aims to provide robust cross-chain capabilities, allowing collateral and assets to be used across various networks. Plans to support native BTC in the near future are intended to further establish BTCFi as a genuine cross-chain platform.

Integration with other blockchain networks expands BTCFi's utility, enabling users to link BtcUSD tokens to external platforms. This empowers Bitcoin holders to seamlessly participate in diverse DeFi applications and services beyond the Bifrost ecosystem.^[3][5][10]

Use Cases

BTCFi provides various opportunities for BTC holders to potentially generate profits. Users can aim to utilize Bifrost's decentralized applications like BiFi and Everdex to lend BtcUSD or deposit it into stable pools, with the intention of minimizing risks. BtcUSD can also be employed in other supporting DApps such as ALEX on Stacks.

Additionally, users can aim to invest in other cryptocurrencies through BtcUSD, holding multiple assets simultaneously to potentially benefit from their upsides.

Leveraging Bifrost's cross-chain engine, BTCFi aims to enable access to DApps across various platforms like Ethereum, Stacks, BNB Chain, and Arbitrum.^[3]

Tokenomics

BtcUSD

BtcUSD is a stablecoin backed by Bitcoin collateral, maintaining a 1:1 peg to the US dollar, facilitating versatile use within the DeFi ecosystem. Its reliance on Bitcoin allows users to potentially hold BtcUSD long-term for stable earnings.

Unlike other cryptocurrency-backed stablecoins, BtcUSD aims to be solely backed by Bitcoin, aiming to reduce liquidation risk and ensure stability against the US dollar more effectively. Its decentralization is intended to provide security against censorship and manipulation.

BtcUSD's resilience, secured by Bitcoin's substantial Total Value Locked (TVL), is positioned as a decentralized stablecoin. Powered by Bifrost's cross-chain capabilities, BtcUSD aims to be the first Bitcoin-based stablecoin fully cross-chain capable, potentially enabling users to mint it on various networks through BTCFi.^[11][12]

Utility

BtcUSD aims to simplify by collateralizing BTC to mint BtcUSD for use across various DeFi platforms like Everdex and BiFi, offering a low-interest loan option without selling BTC.

Its utility aims to extend across multiple networks through Bifrost Network, including services like Aave, Compound, MakerDAO, and Bitcoin's Layer 2 solutions, aiming to broaden accessibility.

Notably, BtcUSD enables leveraging positions: BTC holders can aim to take low-interest loans against their BTC, mint BtcUSD, and further invest in BTC or provide liquidity in DeFi, aiming to enhance Bitcoin's yield potential.^[13]