BTCFi Rising Star bitSmiley Secures $10 Million in Funding, In-Depth Analysis of Its Products and Technology

Recently, a highly regarded BTCFi project secured a new round of financing amounting to 10 million dollars to accelerate its plans for launching the stablecoin bitUSD on the Bitcoin network. What is so special about this project, affectionately referred to as "smiley face"? What is its core technological framework? Why is the BTCFi market so widely sought after? Let's delve deeper into this.

The Three Core Components of bitSmiley

The project draws on the successful experience of the Ethereum DeFi ecosystem, combining mature models such as MakerDAO and Compound, and has launched three main components:

1. bitUSD: This is an over-collateralized stablecoin protocol, similar to DAI. Users can deposit Bitcoin into the project's treasury to mint bitUSD. This stablecoin adopts the bitRC20 standard, ensuring high transparency, and collaborates with a certain cross-chain platform to achieve native cross-chain functionality, guaranteeing liquidity in a multi-chain environment.

2. bitLending: This is a native trustless lending protocol. It utilizes peer-to-peer atomic swap technology to facilitate transaction matching and introduces an insurance system to optimize the clearing process issues in traditional lending.

3. Credit Default Swap (CDS): This is an innovative derivative agreement. It integrates NFT slicing CDS technology and uses an aggregated bidding method, aiming to improve the efficiency and fairness of the CDS market.

Core Technology Highlights

1. Native Cross-Chain Technology: The project collaborates with a POS blockchain based on the Cosmos SDK and Tendermint PBFT consensus engine to achieve native cross-chain capabilities. This technology effectively tracks and manages UTXOs on the Bitcoin network, enabling secure cross-chain operations. Furthermore, this full-chain smart contract technology allows for transparent management of all-chain assets.

2. bitRC20 Standard: This is an innovative standard inspired by Bitcoin's inscription technology. When users collateralize BTC, they first bridge assets through the official channel. Then, after confirming the user's collateral, the project's Layer 2 chain sends a minting instruction for bitUSD to the Bitcoin mainnet. Unlike the traditional BRC20 standard, bitRC20 introduces Mint and Burn operations to meet the demand for dynamic adjustments in the supply of stablecoins.

The Potential of the BTCFi Market

The BTCFi market has gained widespread attention for two main reasons:

1. Huge growth potential: Currently, the total locked amount in the Bitcoin network is about 1.6 billion USD, accounting for only 0.14% of the total market value of Bitcoin. Compared to other public chains, this ratio has 50-100 times of growth potential. Moreover, the potential sources of funds are not limited to on-chain, but also include a large amount of off-chain demand behind Bitcoin and Ethereum ETFs.

2. Strategic Layout: Mastering the applications of core Bitcoin assets such as stablecoins, lending, and derivatives can not only occupy an important position in the Bitcoin ecosystem but also influence the entire cross-chain environment. This layout has the potential to reactivate and lead innovation in the DeFi space.

As more projects and capital flow into the BTCFi space, we can expect to see more innovative solutions and application scenarios emerge. This will undoubtedly bring new growth momentum and development opportunities to the entire cryptocurrency industry.