Are you ready to join DeFi on Bitcoin?

[KryptoBull]

Just about a year ago, BTC was still only being used as a means of payment (as Satoshi had hoped) or a reserve asset. Even in 2020, Bitcoin almost did not participate in the DeFi summer. Even when combining "Bitcoin" with "DeFi" in 2021, many investors will immediately think of a scam project taking advantage of the Bitcoin and DeFi trend. However, it seems things are different as technology evolves and Layer-2 solutions are providing more use cases for BTC. For example, Stacks and Rootstock again introduced smart contracts, allowing more applications to be built based on Bitcoin, including DeFi Dapps^[1].

Bitcoin's TVL has reached 2.34B USD^[2], ranking 6th among all chains, surpassing Polygon, Avalanche and Optimism^[3]. Tron is also planning to launch a Bitcoin Layer-2 solution to connect and power DeFi on Bitcoin^[4].

Recently, Binance Labs, the venture capital arm of crypto titan Binance, invested in a novel project called Babylon. This innovative protocol paves the way for Bitcoin staking on PoS blockchains, offering exciting possibilities for both Bitcoin holders and PoS ecosystems. BTC holders will earn additional income from their existing Bitcoin holdings without relying on complex solutions^[5].

I am a Bitcoin's fan, and I have been actively continuing DCA BTC. Honestly, I would feel better having my BTC stored in my personal wallet, rather than being sent to some DeFi protocols whose safety I don't really understand and trust. I know that DeFi summer may be coming this year thanks to the wave of staking and restaking trends, the profits from DeFi could be huge and I will have more income from my BTC, but I still don't have enough motivation and reason to join DeFi on Bitcoin. Perhaps because my risk appetite is so bad, I worry about the fate of my BTC in the fledgling DeFi protocol under the eyes of increasingly professional hackers.

I would like to know your views on Defi on Bitcoin:

• What are your thoughts on storing BTC?
• Do you believe DeFi represents an evolution for Bitcoin?
• Are you interested in participating in DeFi with your Bitcoin?

Refenrences:
[1] Bitcoin’s Expanding Ecosystem: Layer-2, DeFi, NFT
[2] DefiLlama: Bitcoin Total Value Locked
[3] DefiLlama: Total Value Locked All Chains
[4] Tron founder unveils Bitcoin layer-2 solution as BTC DeFi breaks $1.2 billion in TVL
[5] Binance Backs a Bitcoin Staking Solution: The Next Big Thing in Crypto?
Note:

• My opinion was posted first in that topic, on Bitcointalk
• I leave the source link to avoid plagiarism accusation.
• I excluded/ included minor things from an original thread ^{if necessary}.

[TomPluz]

1. What are your thoughts on storing BTC?

We should really be storing our Bitcoin in the safest way possible and that is using a wallet we can trust will not be able to stab our back for any reason, using the best technology making sure the digital assets will not be taken by anybody except the owner himself. And this is quite true especially in the bullish season when scammers and hackers are so busy looking for people they can victimized.

2. Do you believe DeFi represents an evolution for Bitcoin?

In a way, a big YES though I would say that DeFi should have come a long time ago into Bitcoin but for lack of technology this has only recently became possible. And though it is late in the game, Bitcoin still managed to be the number 6 among many blockchains in the market. This signifies one thing: people in Bitcoin have been looking for this opportunity they can participate in DeFi and finally it is already a big reality. I am looking forward for Bitcoin to soon be at number 3 if not the number 2 though admittedly this is also a very competitive market with more established players already trenched on their thrones.


3. Are you interested in participating in DeFi with your Bitcoin?

Just like you, I maybe reluctant to be a part of the DeFi opportunity using my Bitcoin. In the fist place, I don't have a lot of Bitcoin and second I prefer to go for the safest route just by holding my BTC in my wallet. Now, this is just my personal opinion because I understand that DeFi is offering us sometimes a very irresistible offer to earn some passive income out of our crypto holdings...so yes it depends on how one is looking at the opportunity and the possible risks involved. Big rewards are waiting for people who can manage risks well...so true in life and so true in the cryptocurrency industry.

[Zed0X]

As long as it doesn't affect the L1, I don't really care that much. I think a lot of layer 2 on top of Bitcoin are pure speculation and won't have much growth. They say it is innovation, evolution or whatever tech they want to call it but, in reality, these projects just want to attach the name to bitcoin.

[joniboini]

I'm always skeptical about anything related to passive earnings, especially when the coin is not designed around that purpose. This sounds like one of those projects where people need to risk their Bitcoin for something small. Why not stake coins or tokens that are specifically designed around that? I bet these platforms will use the deposited BTC to lend it to other people just like what has happened. I bet we will see another Celcius sooner or later and they will go bankrupt again. I remain pessimistic if we're talking about that. Anchoring L2 data so they can print NFT or something similar on BTC is not as bad as that IMO, since bloating the main network with meme NFT is not what we want to begin with.

[ABCbits]

I would like to know your views on Defi on Bitcoin:

• What are your thoughts on storing BTC?
• Do you believe DeFi represents an evolution for Bitcoin?
• Are you interested in participating in DeFi with your Bitcoin?

1. If people just want to store their Bitcoin securely, they should just store it on Bitcoin main network rather than Bitcoin sidechain.
2. Evolution? No. But i'd rather see people use DeFi on Bitcoin sidechain rather than altcoin or Bitcoin main network.
3. Not really. Only Babylon Chain which somewhat interest me since they claim to be non-custodial by locking our Bitcoin with time-lock rather than send it to someone elsel.

[Z-tight]

When you talk of DeFi on BTC, it does not make sense to me, BTC is the only true decentralized coin and crypto network that i know, not all these DeFi projects, of which many is a scam. BTC was created as purely p2p electronic cash that is permissionless and censorship resistant, so now what do you mean when you talk about 'DeFi on BTC'.

What are your thoughts on storing BTC?
Do you believe DeFi represents an evolution for Bitcoin?

BTC should be stored in the BTC main chain, and if you want your coins safe, you store them in a hardware or airgapped wallet. It is also worth mentioning that DeFi represents no evolution in BTC, the network has always been decentralized and censorship resistant.

[KryptoBull]

When you talk of DeFi on BTC, it does not make sense to me, BTC is the only true decentralized coin and crypto network that i know, not all these DeFi projects, of which many is a scam. BTC was created as purely p2p electronic cash that is permissionless and censorship resistant, so now what do you mean when you talk about 'DeFi on BTC'.
--
BTC should be stored in the BTC main chain, and if you want your coins safe, you store them in a hardware or airgapped wallet. It is also worth mentioning that DeFi represents no evolution in BTC, the network has always been decentralized and censorship resistant.

You can refer to some DeFi protocols in the Stacks ecosystem, or ideas from the Babylon project. I think they are not scam projects, meaning we can absolutely use BTC for DeFi purposes, for example staking, which we cannot do on Bitcoin main-net.

It seems that the majority of the members who responded do not have much interest in DeFi on Bitcoin, and everyone wants to store their BTC in the safest place. So how much profit is attractive enough for you to try putting a small portion of BTC into DeFi on Bitcoin? APR 20% or 100%?

[gunhell16]

I just want to ask you OP, since you brought it up here, are you okay with putting bitcoin in any Bitcoin defi protocols compared to hardware wallets or non-custodial wallets or software wallets like Electrum?

For me there is no problem if I trade other top cryptocurrencies on defi protocols. But when it comes to storing bitcoin, maybe I'm more comfortable with saving bitcoin on electrum than on the defi platform.

[hugeblack]

The use of the word DeFi here is a misuse of the term. networks above are sidechains or second layers, starting with Lightning, Rootstock, LIQUID, which are mainly based on a two-way bridge, while the term Decentralized Finance (DeFi) is used in peer-to-peer exchanges between financial services or different Blockchain.

[Sim_card]

The best place to store your bitcoin is a self custody wallet where only you will have access to your seed phrase and anyone that keeps his bitcoin with a third party for little peanut, is risking his coins because anything can happen to them tomorrow. The best way to store bitcoin is a noncustodial wallet, and I store mine in my electrum wallet, and I think it is very safe there. I have cool with the compounding interest from bitcoin volatile nature, and I don't believe on third party interest for the safety of my coins.

[koang]

The rapid growth in the Bitcoin layer 2 space is indeed fascinating.
However, It is important to note that these Bitcoin L2 may not fit the traditional definition of a layer 2 solution.
Honestly, I'm not interested in Bitcoin DeFi. The security and gas fees make me worry.
Keeping my Bitcoin in a non-custodial wallet will make me sleep better.

[Gurujebs]

The rapid growth in the Bitcoin layer 2 space is indeed fascinating.
However, It is important to note that these Bitcoin L2 may not fit the traditional definition of a layer 2 solution.
Honestly, I'm not interested in Bitcoin DeFi. The security and gas fees make me worry.
Keeping my Bitcoin in a non-custodial wallet will make me sleep better.

If not for the smart contract solution that native blockchain of Bitcoin doesn't have, I don't think most of the smart contract platforms that we have today will ever grow to these level. I don't like anything related Defi that is not Bitcoin itself, look at how many of the Defi platforms died and crash and they are yet to recover to date, wasted effort, energy and people funds for nothing.

If you look at this Bitcoin later 2 before now, even the total vale lock was below this but the growth of Bitcoin and revival of the market made it reach this level. As for me, I will advice anyone to invest in native Bitcoin and have peace of mind when sleeping, you never can tell if it this layer 2 can be hack.

[Fivestar4everMVP]

I would like to know your views on Defi on Bitcoin:

What are your thoughts on storing BTC?

I still prefer the old way of storing bitcoin, that is the tradition way, which is no other than having to store bitcoin in my private wallet, a wallet which I am very sure and convinced that only me have access to the funds in it.
I could risk storing any other coin or token on exchanges, or some defi protocols where I completely lose ownership of my coins until the protocol decides to give me my coins back, but I will never take such risk with my bitcoins, I like to keep them to myself alone.

Do you believe DeFi represents an evolution for Bitcoin?

Some persons may say yes, but for me, it's a no, defi is rather a set back for bitcoin, because it makes bitcoin usability more expensive, bitcoin can't be used as a meduim of payment for goods and services because all the defi protocols building on top of it have made bitcoin transaction fees very expensive, and have also made transaction confirmation very slow, a clear disadvantage for bitcoin if you ask me for an honest answer.

Are you interested in participating in DeFi with your Bitcoin?

No, not at all, I am not interested and never will I be, bitcoin is for holding, if I need to participate in any defi protocol, I will do so with altcoins, I can't risk altcoin and at the same time, risk my bitcoin as well, makes no sense.

[KryptoBull]

I just want to ask you OP, since you brought it up here, are you okay with putting bitcoin in any Bitcoin defi protocols compared to hardware wallets or non-custodial wallets or software wallets like Electrum?

For me there is no problem if I trade other top cryptocurrencies on defi protocols. But when it comes to storing bitcoin, maybe I'm more comfortable with saving bitcoin on electrum than on the defi platform.

I mentioned in the topic: at this time, I do not feel safe entrusting my BTC to any DeFi protocol. They don't have any allegations of security holes, it's just my concern. Like you, I will feel more secure when I can store my BTC in personal accounts and be safe from the eyes and attacks of professional hackers.

The rapid growth in the Bitcoin layer 2 space is indeed fascinating.
However, It is important to note that these Bitcoin L2 may not fit the traditional definition of a layer 2 solution.
Honestly, I'm not interested in Bitcoin DeFi. The security and gas fees make me worry.
Keeping my Bitcoin in a non-custodial wallet will make me sleep better.

I think Stacks and its solutions are quite interesting, and the community also appreciates Stacks. This is the most famous Bitcoin Layer-2 project but has not been able to gain user trust, Stacks' TVL has not been able to catch up with TVL on Ethereum Layer-2.

I think investors who have faith in Stacks have benefited from the increase in price of the STX token. Those who want to experience DeFi on Bitcoin can join and share their experiences for our reference. If really attractive and safe profits are guaranteed, I think no one would want to refuse the opportunity to have more BTC in rewards.

[joniboini]

This is the most famous Bitcoin Layer-2 project but has not been able to gain user trust, Stacks' TVL has not been able to catch up with TVL on Ethereum Layer-2.
I think investors who have faith in Stacks have benefited from the increase in price of the STX token.

Alternatively, you can argue the market is niche to begin with so there's no way they will compete with Etherum-based defi projects, especially if they offer multichain as one of its key features. If someone believes layer 2 on Bitcoin is the future, they probably need to tone down their short-term target instead of overhyping it which might cause the opposite effect on the market. As far as I know, most Bitcoin enthusiasts don't feel good about anything related to passive income on L2 with Bitcoin at all. Not surprising considering most of them turn out to be a scam, or fundamentally clash with the value of Bitcoin from the beginning.