Stocks' Nakamoto upgrade begins. This upgrade introduces a DeFi-friendly version of Bitcoin on the Stakes blockchain. It joins several other projects vying for a slice of the burgeoning Bitcoin Defy market.
Stacks, a long-running project competing to give users the ability to use their Bitcoin in DeFi, has just launched its Nakamoto upgrade.
project Released The new version of its software gives validators on the network a two-week window to upgrade.
The introduction of sBTC, a Bitcoin-pegged asset secured by the Bitcoin network, is a much-anticipated feature, said Muneeb Ali, co-creator of the Stax blockchain.
Until now, there was no bitcoin from the stocks blockchain.
“sBTC is important,” Ali said News. “Until sBTC goes live, I personally won't focus on any metrics.”
Stacks, as well as more than a dozen competing projects, are creating solutions to overcome Bitcoin's incompatibility with larger DeFi ecosystems.
sBTC is one such alternative that allows users to use Bitcoin in activities such as lending and staking on stocks.
This is a big opportunity.
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Ali says that if only 5% of all bitcoin enters Layer 2s like stocks, which is a realistic goal in the next two years, that would still result in a $70 billion market.
“Right now, it's not even 1% of Bitcoin,” Ali said.
Slow and steady
But the competition is fierce.
Attention moves quickly, and incentives have become a popular tactic to bootstrap deposits and users. Often, the marketing quality of a project is more important than its technology.
In recent months, a rival project has emerged Merlin Chain Its deposits grew to $2.6 billion after incentivizing customers with points promotions and airdrops.
Stocks deposits, on the other hand, have fallen by just 49% since April $95 million.
Deposits to Stacks DeFi protocols have decreased in recent months.
But Ali said he did not believe such incentives would be beneficial in the long run.
“We're not throwing out incentives because of the way stocks have launched,” he said, adding that in 2019 the project became the first project to hold a token offering. Sorted out by the US Securities and Exchange Commission.
“We don't have a big treasury, it's very decentralized. Those things are very important,” Ali said.
It's not just deposits that are going down. According to Electric Capital Developer reportThe number of developers building on stacks has fallen 24% over the past two years.
Stocks are betting on Nakamoto and the introduction of sBTC to reverse these trends. But with many of its competitors already fully up and running, there's no guarantee it can catch up.
More decentralized
One of the reasons the stock has progressed so slowly is its commitment to decentralization.
The easiest and fastest way to make Bitcoin DeFi compatible is for a trusted organization to hold Bitcoin deposits and issue equivalent tokens on another blockchain.
However, this custody system often compromises security and decentralization.
Ethereum DeFi protocol Sky, formerly MakerDAO, recently limited its exposure to wrapped bitcoin due to custody concerns.
Stacks sBTC instead taps into the security of the Bitcoin network directly using smart contracts. These lines of code enforce strict rules, eliminating the need to trust a guardian.
“This is not another bitcoin asset,” Ali said. “It's actually secured by the consensus of the chain.”
Stocks are not the only project to attract customers by removing custodians.
Rootstack, another blockchain that relies on the Bitcoin network for its security, uses a similar technology to secure deposits.
For Ali, there was a difference in what he said.
According to Nakamoto, stacks can't be attacked if its own validators conspire with each other — something unique to the network, he says.
However, that improved safety means stocks are less agile than its competitors.
Yet Ali is confidently moving forward.
“We have a history of doing difficult things the right way,” he said. “I remind people that sometimes it takes longer than you think.”
The Nakamoto upgrade will be completed by mid-September.
There is Tim Craig News' Edinburgh-based DeFi correspondent. Reach out with tips at [email protected].
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