While Bitcoin (BTC) has cemented itself as the largest cryptocurrency by market capitalization, the underlying network has been distanced from the overwhelming growth of the broader blockchain ecosystem.
Due to the absence of smart contract capabilities, the presence of decentralized finance (DeFi) products and services are minimal on the Bitcoin network.
Solutions, including layer-2 projects and sidechains, are taking shape, each aimed at unlocking smart contract capabilities and adding more features to the Bitcoin network.
BTC’s widespread recognition can play a key role in taking DeFi to a new plateau, and third-generation projects have started tapping into its yet unrealized potential.
Accelerating Growth of DeFi
Amid ongoing efforts to bring more financial instruments to the Bitcoin network, layer-2 decentralized exchange (DEX) Portal is busily unlocking many DeFi uses on the Bitcoin blockchain through sidechain protocol Mintlayer.
Earlier this week, Coinbase-backed Portal revealed that its uncensorable cross-chain DEX functionality will integrate with Mintlayer to accelerate the growth of Bitcoin-based DeFi activities.
Per Dr. Chandra Duggirala, executive chairman of Portal, “Portal DEX supports many layers of financial and non-financial applications on Bitcoin. It means that the Bitcoin protocol does not need to be upgraded to achieve any new functionality. This can increase Bitcoin adoption, its security budget, and its usability as a truly global monetary system. Supporting Mintlayer sidechain assets naturally fits into our ecosystem approach to bringing many layers to Bitcoin.”
Compared to other ecosystems, DeFi on Bitcoin has just commenced, and this new direction represents a significant milestone in the growth of these activities. As more developers and projects enter the Bitcoin DeFi ecosystem, Portal and Mintlayer’s collaboration can help ensure users don’t experience the challenges currently facing networks like Ethereum (ETH) and third-party bridges.
Together, they aim to drive DeFi momentum by offering users and developers access to Bitcoin’s security and liquidity, paired with low gas fees and cross-chain interoperability.
Further expounding the benefits of this strategic partnership for the overall Bitcoin ecosystem, Mintlayer CEO Enrico Rubboli noted, “Mintlayer is a tokenization layer built on top of Bitcoin, enabling native swaps with BTC, including using the Lightning Network. Portal’s cross-chain DEX can help make multi-chain implementations more viable, allowing token issuers to take advantage of the unique capabilities of different protocols, including Bitcoin sidechains like Mintlayer, thereby plugging the entire web3 ecosystem to the most decentralized and valuable blockchain, and the world’s hardest money.”
Both Mintlayer and Portal are committed to providing users with a private, secure, and affordable way to interact with the DeFi ecosystem. Currently, BTC holders must undertake many steps to participate in DeFi, including but not limited to minting wrapped tokens (like wBTC and wETH), and relying on third-party intermediaries to take advantage of staking, yield farming, and other similar opportunities.
Portal DEX overcomes these challenges by leveraging atomic swaps. The platform supports both layer-2 and layer-3 technologies, eliminating the need for bridges or wrapping assets to transfer them onto other networks. At the same time, Portal distributes liquidity to all Bitcoin sidechain assets and layered applications.
On the other hand, Mintlayer serves as Bitcoin’s sidechain, designed to improve direct token interoperability and enable native BTC swaps. It also offers several other features to enforce network security, increase node inclusivity, and ensure long-term sustainability.
Adding sidechain assets on Mintlayer will increase the number of trading pairs available on Portal DEX, thereby benefiting Mintlayer by making its assets accessible to a more extensive customer base through Portal’s censorship-resistant cross-chain exchange.
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