DeFi

How to invest in DeFi: A complete step-by-step guide

Published

7 months ago

17 June, 2024

Defi investment can be intimidating for those new to the crypto world. This guide aims to simplify the process by defining what DeFi is and highlighting potential investment opportunities for investors to consider.

What is DeFi?

Decentralized finance (DeFi) is an umbrella term for Internet-native financial products operating on public blockchains. In the DeFi market, you can access many of today’s products available in the traditional financial system, like borrowing, earning interest accounts, and trading.

However, DeFi doesn’t rely on intermediaries as traditional finance (TradFi) does. Instead, users interact with smart contracts allowing them to, for example, lend out their crypto assets to other users. In traditional finance, third parties typically slow down financial processes, and their involvement increases costs. If done right, in DeFi, these specific problems are mostly eliminated.

DeFi users enjoy 24/7 access to financial products from anywhere in the world and transparency thanks to blockchain technology, which makes all transactions visible to everyone. Moreover, users don’t have to provide their personal information like names, email addresses, and phone numbers, making DeFi pseudonymous. They simply connect their non-custodial wallets to the DeFi platforms, which allow them to move their crypto assets anywhere without requiring long transfers to complete or asking for approval.

DeFi is accessed through protocols — autonomous programs — built on Ethereum, BNB Smart Chain, Tron, Polygon, Avalanche, Solana, Arbitrum, Optimism, Cronos, and many other smart contract blockchain networks. Smart contracts are self-executing codes that live on the blockchain. They execute based on predetermined conditions, thereby generating an outcome.

What is DeFi investing?

DeFi investing means adding DeFi exposure into your portfolio, either by purchasing DeFi assets or by putting your money to work by deploying it in DeFi protocols to earn returns potentially.

Let’s take a look at the most common ways you can invest in the decentralized finance market.

Setting up your digital wallet

To invest in DeFi, you’ll need a digital wallet in which to store funds. Popular choices include MetaMask, Ledger, and Trust Wallet, so let’s take a look at how it’s done.

MetaMask

MetaMask is a cryptocurrency wallet where users can store Ethereum and other Ethereum-based tokens, with Ethereum being the main network used in decentralized finance.

Here’s how to set up your MetaMask wallet:

Go to MetaMask.io
Choose a browser and click “Install MetaMask”
Click “Create a new wallet”
You’ll be prompted to write down a series of words called a seed phrase. Keep this information safe! If you forget your password, this phrase is your backup password. You’ll want to store it offline away from hackers and be careful not to lose it.
That’s it! You’ve now set up MetaMask. You can send Ethereum to the MetaMask deposit address and can connect your wallet to DeFi exchanges and other apps to make transactions. Check out this article on how to use the MetaMask wallet for more info.

Ledger

Ledger is a hardware wallet that stores crypto in cold storage or offline storage, which means it can’t be remotely accessed by other people. As such, it’s a highly secure option for anyone looking to safeguard their funds.

Buy a Ledger wallet from the official ledger.com website
When your hardware device arrives, download and install the app as per the device instructions
Set up a new device and generate your seed phrase, AKA your recovery password, which should be stored somewhere safe and offline. If your device is damaged or lost, the seed phrase is the only way to recover your funds, so look after it!
From there you can choose a password and PIN and store Ethereum as well as hundreds of other cryptos on your wallet.

Trust Wallet

Trust Wallet is a handy mobile wallet that allows you to store funds, swap them, buy crypto with a debit or credit card, and even access other DeFi protocols through its Web3 browser.

Here’s how to set it up.

Install the Trust Wallet app on your mobile device
Create a new account and generate your seed phrase, the backup password you’ll need if you lose or damage your phone. Seed phrases should always be stored offline in a safe place, and never disclosed to anyone online as they can be used to access your funds.
Create a password for your wallet
That’s it! You’re all set to deposit a wide variety of cryptos, buy some directly, and access DeFi protocols right away.

Great, our wallet is all set up. But how do you know which projects to invest in?

Selecting DeFi projects for investment

There are a lot of great decentralized finance projects, and a lot of projects that aren’t so great.

Things to factor in when you’re assessing a project are the reputation of a project, which you can measure from social media commentary and news coverage. If a project has suffered hacks and mismanagement, maybe it’s not the ideal place to store your funds. Newer projects are also typically viewed with skepticism due to the statistically higher risk of a scam or failure taking place.

Another factor to consider is the extent to which a project is actually decentralized. While the term is thrown around a lot in DeFi, many so-called DeFi projects are actually very centralized indeed, with a core team controlling the decisions being made, how the project funds are spent, and often having sole access to all funds deposited by users. This is a perfect storm for the dreaded “rug-pull” or exit scam where project staff simply drain the project’s coffers and disappear.

Of course, it’s easier to pull a move like that when the team is anonymous. For that reason, some investors prefer to choose projects with staff whose identities are public and who have strong track records of ethical project management.

The main area of focus, of course, is the use case and underlying technology of a project. What does it do? Is it useful? Is it solving a real problem, or was it simply created to capitalize on the DeFi boom? Reading a project whitepaper can often be illuminating, as it tends to reveal the full scope of a project’s goals, the level of thought and effort that has gone into the project, and what it actually does.

By choosing reputable projects that are decentralized (i.e., government democratically by their community) and have a strong use case that solves a real problem, investors can start identifying some potentially strong candidates for their portfolio.

All set picking projects? Great. Here’s how to invest in decentralized finance.

How to invest in DeFi: Options

Investing in DeFi tokens

This is probably the easiest way to invest in DeFi since it involves investing in DeFi tokens. A DeFi token is the native crypto asset of a specific DeFi protocol. Such a token enables users to interact with the protocol in various ways depending on the purpose it has been given. For instance, governance is a common purpose given to tokens on several DeFi protocols. They give holders voting rights, allowing them to participate in protocol governance.

Investors can speculate on the future prices of these tokens by adding them to their crypto investment portfolios. Besides long-term holding, investors with trading expertise may exploit the price movements of DeFi tokens to potentially make even more money.

Examples of popular DeFi tokens include UNI (Uniswap), AAVE (Aave), MKR (Maker), and SNX (Synthetix). Besides their native tokens, some protocols issue stablecoins as well. These are digital assets pegged to stable assets like the US dollar, making them less volatile.

DeFi users may utilize stablecoins as collateral when borrowing because of their price stability. DAI is a well-known stablecoin in the world of DeFi. A decentralized autonomous organization (DAO) called MakerDAO manages its issuance.

Buying a DeFi token index

Crypto token indexes track the price of a bundle of crypto assets, permitting investors to diversify their crypto portfolios cost-effectively.

Diversification is an investment strategy where investors minimize risk by investing in different assets. A DeFi token index tracks the price of a bundle of DeFi tokens. One such example is the DeFi Pulse Index Token (DPI).

DeFi Pulse Index (DPI) is an Ethereum-based token that tracks the performance of different DeFi tokens. The underlying assets in the DPI index have to be available on Ethereum and must be associated with a DeFi protocol listed on DeFi Pulse, a website that tracks and ranks DeFi projects. Also, it only tracks projects that have significant usage and are committed to protocol development. The index doesn’t include crypto assets that are securities, synthetic digital assets, or wrapped tokens.

Investors can buy DPI on KuCoin, Gemini, Sushiswap, Uniswap, and 1inch Exchange. The underlying tokens in the index are Uniswap, Yearn, Compound, Rari Capital, Loopring, Maker, Sushi, Aave, Balancer, Cream, Farm, Vesper, Instadapp, Synthetix, Badger, Kyber Network Crystal, and Ren. DPI is “weighted based on the value of each token’s circulating supply” and is managed every quarter.

Phuture DeFi Index (DPI) is another DeFi token index. It provides exposure to the top DeFi tokens by market capitalization. The underlying crypto assets are selected if they are on the Ethereum blockchain and listed on the DeFi data website, DeFi Llama. PDI is maintained monthly. Investors can buy PDI on the Bancor Network and the Phuture website. The assets in this index include Aave, Uniswap, Sushi, Maker, Compound, 1Inch, Yearn Finance, Balancer, Amp, and Lido.

Engaging in DeFi lending

DeFi lending is a way for investors to lend their crypto assets to other users on a lending protocol. This way, they generate interest, which is automatically calculated by an algorithm based on the changing supply and demand for loans. Lenders receive frequent interest payments in crypto.

DeFi protocols protect lenders by demanding that borrowers overcollateralize their loans. This means the collateral exceeds the loan value. If the borrower fails to maintain the collateral above the required threshold, a margin call occurs, and the protocol liquidates it to pay down the outstanding debt position.

Yield farming & liquidity mining

Liquidity mining is the process of depositing crypto assets in a liquidity pool. In exchange for providing liquidity, liquidity miners earn a reward in the form of transaction fees calculated as an annual percentage yield (APY).

Yield farming, on the other hand, is a subset of liquidity mining. Hence, it also entails providing liquidity to a pool. However, instead of just earning rewards sourced from transaction fees, they also receive the protocol’s native token (typically a governance token) on top of the fees. Investors who want to maximize their returns may “farm” for more yields by moving their crypto assets around in search of pools with the best APYs.

Monitoring and managing your investments

DeFi investors often invest in the hopes of passive income, but the truth is that some maintenance is required no matter what you do. Successful investors typically use a portfolio management software to track the progress of their investments and stick to any pre-determined profit or loss goals they’ve established.

Outlining such goals, and a wider investment plan in general, is considered wise by most investors. Investors typically choose an exit strategy, meaning they know exactly how much profit they’re looking for and have the discipline to sell their assets at a certain price point instead of simply letting gains ride without a concrete plan.

It’s also a common practice in financial investments of any kind to ensure that the portfolio is diverse enough to withstand the downturn. This means that while one project might do poorly, the other investments in your portfolio aren’t all so connected to the first project that they all fail at the same time.

The Risk of DeFi Investing

DeFi investing could be rewarding, but it comes with a few risks. They are as follows:

Smart contract risk: Poorly developed smart contracts may have bugs, creating a potential loophole that a hacker can use to steal funds.
Market risk: Crypto assets in a pool could lose their value if prices drop sharply from the time they were deposited. Hence, investors who remove their assets from the pool at such a time may incur losses. Drastic price crashes could also remove a lot of liquidity from the pool, resulting in high levels of slippage. This could mean buyers will pay more for assets than expected. Slippage is the difference between the quoted price and the actual price when an order is executed.
Governance attacks: An entity could purchase a majority of the protocol’s governance tokens, helping them influence the outcome of votes.
Custody risk: Investors are in charge of keeping their crypto assets. This is a huge responsibility that requires a lot of caution. Careless investors are, therefore, in danger of losing their private keys, meaning they can’t access their funds.
Regulatory risk: The DeFi markets are essentially unregulated, making them a target for financial regulators, which, in turn, creates a risk of investors holding DeFi assets that may be negatively affected by regulations that could be rolled out in the future.

FAQs

How Much Should I Invest in DeFi?

You should never invest what you cannot afford to lose. This applies to DeFi investing as well. DeFi beginners may be better off investing a small amount at first. Once they understand how DeFi works, they could increase the size of their investment. But remember that DeFi is generally a lot riskier than buying and holding Bitcoin, for example.

Is DeFi a Good Investment?

The definition of a “good” investment will vary from person to person. It is based on their risk tolerance and the returns they expect from their investment. What DeF is for certain, however, is very risky. So you should never invest more than you can afford to lose.

How Can I Get Started in DeFi?

Open the DeFi protocol of your choice in your browser and connect a supported wallet. Next, add the required cryptocurrency to your wallet and start staking, lending, borrowing, or swapping tokens.

Fuente

DeFi

Haust Network Partners with Gateway to Connect to AggLayer

Published

6 months ago

1 August, 2024

Financial Block Staff

Haust Network Partners with Gateway to Connect to AggLayer

Dubai, United Arab Emirates, August 1, 2024, Chainwire

Consumer adoption of cryptocurrencies is a snowball that is accelerating by the day. More and more people around the world are clamoring for access to DeFi. However, the user interface and user experience of cryptocurrencies still lag behind their fundamental utility, and users lack the simple and secure access they need to truly on-chain products.

Haust Network is a network and suite of products focused on changing this paradigm and bringing DeFi to the masses. To achieve this goal, Haust Network has announced its far-reaching partnership with bridgeseasoned veterans in rapidly delivering revolutionary blockchain utilities for projects. The Gateway team empowers blockchain developers to build DAOs, NFT platforms, payment services, and more. They drive adoption of crypto primitives for individuals and institutions around the world by helping everyone build their on-chain presence.

Gateway specializes in connecting sovereign blockchains to the Aggregation Layer (AggLayer). The AggLayer is a single unified contract that powers the Ethereum bridge of many disparate blockchains, allowing them all to connect to a single unified liquidity pool. The AggLayer abstracts away the complexities of cross-chain DeFi, making tedious multi-chain transactions as easy for the end user as a single click. It’s all about creating access to DeFi, and with Polygon’s technology and the help of Gateways, Haust is doing just that.

As part of their partnership, Gateway will build an advanced zkEVM blockchain for Haust Network, leveraging its extensive experience to deploy ultra-fast sovereign applications with unmatched security, and enabling Haust Network to deliver its products to its audience.

The recently announced launch of the Haust Wallet is a Telegram mini-app that provides users with access to DeFi directly through the Telegram interface. Users who deposit funds into the wallet will have access to all standard send/receive services and generate an automatic yield on their funds. The yield is generated by Haust Network’s interconnected network of smart contracts, Haustoria, which provides automated and passive DeFi yielding.

As part of this partnership, the Haust Network development team will work closely with Gateway developers to launch Haust Network. Gateway is an implementation provider for Polygon CDK and zkEVM technology, which the Haust wallet will leverage to deliver advanced DeFi tools directly to the wallet users’ fingertips. Haust’s partnership with Gateway comes shortly after the announcement of a high-profile alliance with the Polygon community. Together, the three will work to build Haust Network and connect its products to the AggLayer.

About Haust Network

Haust Network is an application-based absolute liquidity network and will be built to be compatible with the Ethereum Virtual Machine (EVM). Haust aims to provide native yield to all users’ assets. In Telegram’s Haust Wallet, users can spend and collect their cryptocurrencies in one easy place, at the same time. Haust operates its network of self-balancing smart contracts that interact across multiple blockchains and then efficiently funnel what has been generated to Haust users.

About Gateway

bridge is a leading white-label blockchain provider that offers no-code protocol deployment. Users can launch custom blockchains in just ten minutes. They are an implementation provider for Polygon CDK and have already helped projects like Wirex, Gnosis Pay, and PalmNFT bring new utility to the crypto landscape.

About Polygon Labs

Polygon Laboratories Polygon Labs is a software development company building and developing a network of aggregated blockchains via the AggLayer, secured by Ethereum. As a public infrastructure, the AggLayer will aggregate the user bases and liquidity of any connected chain, and leverage Ethereum as the settlement layer. Polygon Labs has also contributed to the core development of several widely adopted scaling protocols and tools for launching blockchains, including Polygon PoS, Polygon zkEVM, and Polygon Miden, which is currently under development, as well as the Polygon CDK.

Contact

Lana Kovalski
haustnetwork@gmail.com

Fuente

DeFi

Ethena downplays danger of letting traders use USDe to back risky bets – DL News

Published

6 months ago

1 August, 2024

Financial Block Staff

Ethena downplays danger of letting traders use USDe to back risky bets – DL News

Ethena and ByBit will allow derivatives traders to use USDe as collateral.
There is a risk in letting traders use an asset partially backed by derivatives to place more bets.

Ethena has downplayed the dangers of a new feature, which will allow traders to put up its synthetic dollar USDe as collateral when trading derivatives, which are risky bets on the prices of crypto assets.

While allowing users to underwrite their trades with yield-bearing USDe is an attractive prospect, Ethena said there is potential risk in letting traders use an asset partially backed by derivatives to place even more derivatives bets.

“We have taken this risk into account and that is why Ethena operates across more than five different sites,” said Conor Ryder, head of research at Ethena Labs. DL News.

The move comes as competition in the stablecoin sector intensifies.

In recent weeks, PayPal grown up the amount of its stablecoin PYUSD in circulation 96%, while the MakerDAO cooperative plans a rebrandingaiming to increase the supply of its DAI stablecoin to 100 billion.

US dollar growth stagnates

It comes as Ethena has lost momentum after its blockbuster launch in December.

In early July, USDe reached a record level of 3.6 billion in circulation.

That figure has now fallen by 11% to around 3.2 billion.

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New uses for USDe could boost demand for Ethena’s products.

This is where the new plan, announcement Tuesday with ByBit, one of its partner exchanges, is coming.

Ethena users create USDe by depositing Bitcoin or Ether into the protocol.

Ethena then covers these deposits with short positions – bearish bets – on the corresponding asset.

This creates a stable support for USDe, unaffected by price fluctuations in Bitcoin or Ether.

Mitigate risks

While using USDe as collateral for derivatives trading is proving popular, it is unclear what the effects will be if the cryptocurrency market experiences major fluctuations.

Using derivatives as collateral to place more bets has already had disastrous effects.

In June 2022, Lido’s liquid staking token stETH broke its peg to Ether following the fallout from the Terra collapse.

Many traders who used looping leverage to increase their stETH staking yields were liquidated, creating a cascade that caused the price of Ether to drop by more than 43%.

Ethena Labs founder Guy Young said: DL News His office and his partners have taken many precautions.

Ethena spreads bearish bets supporting the USDe across the five exchanges it partners with.

According to Ethena, 48% of short positions supporting USDe are on Binance, 23% on ByBit, 20% on OKX, 5% on Deribit, and 1% on Bitget. website.

In doing so, Ethena aims to minimize the impact of an unforeseen event on a stock market.

The same theory applies to the distribution of risks across different supporting assets.

Fifty percent of USDe is backed by Bitcoin, 30% by Ether, 11% by Ether liquid staking tokens, and 8% by Tether’s USDT stablecoin.

Previous reviews

Ethena has already been criticised regarding the risks associated with USDe.

Some have compared USDe to TerraUSD, an undercollateralized stablecoin that collapsed in 2022.

“It’s not a good design for long-term stability,” said Austin Campbell, an assistant professor at Columbia Business School. said as the USDe launch approaches.

Young replied to critics, saying the industry needs to be more diligent and careful when “marketing products to users who might not understand them as well as we do.”

Ethena has since added a disclaimer on its website stating that USDe is not the same as a fiat stablecoin like USDC or USDT.

“This means that the risks involved are inherently different,” the project says on its website.

Tim Craig is DL News DeFi correspondent based in Edinburgh. Feel free to share your tips with us at tim@dlnews.com.

Fuente

DeFi

Cryptocurrency and defi firms lost $266 million to hackers in July

Published

6 months ago

1 August, 2024

Financial Block Staff

Crypto companies, defi lost $266m to hackers in July

In July 2024, the cryptocurrency industry suffered a series of devastating attacks, resulting in losses amounting to approximately $266 million.

Blockchain Research Firm Peck Shield revealed in an X post On August 1, attacks on decentralized protocols in July reached $266 million, a 51% increase from $176 million reported in June.

The most significant breach last month involved WazirX, one of India’s largest cryptocurrency exchanges, which lost $230 million in what appears to be a highly sophisticated attack by North Korean hackers. The attack was a major blow to the stock market, leading to a break in withdrawals. Subsequently, WazirX launched a program in order to recover the funds.

Another notable incident involved Compound Finance, a decentralized lending protocol, which suffered a governance attack by a group known as the “Golden Boys,” who passed a proposal who allocated 499,000 COMP tokens – valued at $24 million – to a vault under their control.

The cross-chain liquidity aggregation protocol LI.FI also fell victim On July 16, a hack resulted in losses of $9.73 million. Additionally, Bittensor, a decentralized machine learning network, was one of the first protocols to suffer an exploit last month, lo m ing $8 million on July 3 due to an attack targeting its staking mechanism.

Meanwhile, Rho Markets, a lending protocol, suffered a $7.6 million breach. However, in an interesting twist, the exploiters research to return the stolen funds, claiming the incident was not a hack.

July 31, reports The Terra blockchain protocol was also hacked, resulting in a loss of $6.8 million across multiple cryptocurrencies. As crypto.news reported, the attack exploited a reentrancy vulnerability that had been identified a few months ago.

Dough Finance, a liquidity protocol, lost $1.8 million in Ethereum (ETH) and USD Coin (USDC) to a flash loan attack on July 12. Similarly, Minterest, a lending and borrowing protocol, saw a loss of $1.4 million due to exchange rate manipulation in one of its markets.

Decentralized staking platform MonoSwap also reported a loss of $1.3 million following an attack that allowed the perpetrators to withdraw the liquidity staked on the protocol. Finally, Delta Prime, another decentralized finance platform, suffered a $1 million breach, although $900,000 of the stolen funds was later recovered.

Fuente

DeFi

The Rise of Bitcoin DeFi: Then and Now

Published

6 months ago

1 August, 2024

Financial Block Staff

The convergence of Bitcoin’s robust security and Layer 2 scaling solutions has catalyzed the emergence of a vibrant DeFi ecosystem.

By expanding Bitcoin’s utility beyond simple peer-to-peer payments, these advancements have opened up a new frontier of financial possibilities, allowing users to participate in decentralized lending, trading, and other complex smart contract operations on Bitcoin.

Read on to learn about the rise of Bitcoin-based decentralized finance and how the space has expanded to accommodate a new generation of native assets and features.

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What is DeFi?

Decentralized finance (DeFi) represents a paradigm shift in financial services, offering internet-based financial products such as trading, lending, and borrowing through the use of decentralized public blockchains.

By implementing blockchains, smart contracts, and digital assets, DeFi protocols provide financial services through a decentralized ecosystem, where participants do not have to deal with intermediaries when transacting.

What is Bitcoin DeFi?

The inherent limitations of the Bitcoin mainchain in supporting the intricacies of decentralized finance have created the need to develop smart contract-based Layer 2 solutions.

Additionally, the advent of the Ordinals protocol in 2023, which facilitated the emergence of fungible token standards such as BRC-20 and Runes, catalyzed the growth of DeFi on the Bitcoin blockchain.

This expansion in protocol diversity has broadened the applications of the world’s leading cryptocurrency network beyond the core base-layer use cases around value preservation and transactional capabilities.

Therefore, Bitcoin DeFi has become a nascent sector within the digital asset market, after previously being a missing essential part of the Bitcoin ecosystem.

Bitcoin DeFi in its early days

Integrating decentralized finance (DeFi) concepts into the Bitcoin ecosystem has been a journey of innovation and perseverance. Early attempts to bridge the gap between Bitcoin’s fundamental simplicity and DeFi’s complexities have spawned pioneering projects that, while laying essential foundations, have also encountered significant obstacles.

Colored coins

Colored coins represented an early foray into tokenizing real-world assets on the Bitcoin blockchain. By leveraging the existing network to track ownership of assets ranging from stocks to real estate, this approach highlighted Bitcoin’s potential as a platform beyond digital currency. However, scalability and practical implementation challenges have limited its widespread adoption.

Counterpart

Building on the colored coins, Counterparty has become a platform for creating and trading digital assets, including non-fungible tokens (NFTs), on Bitcoin.

The introduction of popular projects like Rare Pepe NFTs has demonstrated the growing appeal of digital collectibles. However, constraints around user experience and network efficiency have hampered its full potential.

These early experiments, while not fully realizing their ambitions, served as valuable stepping stones, informing Bitcoin DeFi’s subsequent developments. Their challenges highlighted the need for more sophisticated infrastructure and protocols to harness the full potential of decentralized finance on the Bitcoin network.

Bitcoin DeFi Today

Today, building DeFi applications on Bitcoin is primarily done in the realm of Layer 2 (L2) networks. This architectural choice is motivated by the limitations of Bitcoin’s base layer in supporting complex programmable smart contracts.

Bitcoin’s original design prioritized security and decentralization over programmability, making it difficult to develop sophisticated DeFi protocols directly on its blockchain. However, the recent emergence of protocols like Ordinals, BRC-20, and Runes, while not DeFi in their own right, has sparked possibilities for future DeFi-like applications on the main chain.

In contrast, L2 solutions offer a scalable and programmable environment built on Bitcoin, enabling the creation of various DeFi products.

By expanding Bitcoin’s capabilities without compromising its core principles, L2s have become the preferred platform for developers looking to build DeFi applications that encompass trading, lending, staking, and more.

Leading L2 networks such as Lightning Network, Rootstock, Stacks, and Build on Bitcoin provide the infrastructure for these efforts. Some of these L2s have even introduced their own native tokens to the network, further expanding Bitcoin’s DeFi ecosystem.

Essentially, while Bitcoin’s core layer presents challenges for DeFi development, its security and decentralization have provided a foundational layer for the innovative L2 landscape to thrive.

Bitcoin Layer 2 offers a promising path to building a robust and thriving Bitcoin-based DeFi ecosystem that offers trading, staking, lending, and borrowing. All you need is a DeFi Wallet like Xverse to access the new world of decentralized financial services secured by Bitcoin.

Conclusion

The integration of DeFi principles into the Bitcoin ecosystem, primarily facilitated by Layer 2 solutions, marks a significant evolution in the digital asset landscape.

Building on the foundational work of pioneers like Colored Coins and Counterparty, the industry has evolved into more sophisticated platforms like Rootstock, Stacks, and Build on Bitcoin to create a thriving Bitcoin-powered DeFi ecosystem.