An Emerging Giant

2024 will be the inflexion point for BTC asset adoption.

Despite being the largest cryptocurrency by market capitalization, the design of the BTC network has made it difficult for builders to create decentralized applications (dApps). The BTC Network (L1) was never designed to host decentralized applications (dApps). This architectural limitation posed a considerable challenge for developers and innovators seeking to extend Bitcoin’s utility beyond being a mere store of value.

However, in recent years, new innovations on the BTC Network has unlocked new use cases;

• Ordinals and recursive inscriptions in particular are enabling new ways of using the Bitcoin blockchain; and

• Smart contract platforms such as Stacks and ICP have enabled DeFi applications to be available on the BTC network.

Innovation is now allowing founders to create utility on top of the BTC network and offer BTC asset holders an alternative to HOLDing.

The Opportunity - Merging Value with Versatility

Currently, the characteristics of the BTC community is vastly different from other ecosystems that have DeFi applications. BTC holders who buy BTC only as a ‘store of value’ have not been exposed to yields, staking, etc.

"Less than 1% of Bitcoin is used in dApps in the Bitcoin ecosystem" - Jasper De Maere, Outlier Ventures Bitcoin Basecamp

With the emergence of RC20 assets, this has made access to DeFi dApps more complex than ever.

The limited knowledge of BTC holders combined with the lack of of opportunities in the BTCFi ecosystem has lowered the utilization rate of BTC in DeFi applications.

(x)RC20

RC20 or ('xRC tokens') tokens are a broad term used to describe various token standards on the Bitcoin blockchain. Some examples include: AR20, SRC20 and BRC20.

BRC20

The BRC20 token was created by Twitter user @domodata on March 8th, 2023.

The BRC20 “token standard: is an experimental fungible token created using Ordinals and Inscriptions and saved on the bitcoin base chain. It utilises Ordinal inscriptions of JSON data to deploy token contracts, mint tokens, and transfer tokens.

BRC20 tokens do not have smart contract capabilities like Ethereum and other smart contract platforms.

• Currently the MCAP of ERC20 tokens is $262B+, while the MCAP for BRC20 tokens is $1.6B.

BTCFi

A broad term used to describe the DeFi opportunities in the BTC ecosystem. BTCFi opportunities are accessed through dApps.

• Currently the TVL of Ethereum is $28B, whereas the TVL in the Bitcoin ecosystem is at $0.3B