This brings decentralized finance (DeFi) capabilities to Bitcoin, allowing users to stake, borrow, lend and supply liquidity for additional yield.
Native Bitcoin Layer 2 blockchain Merlin Chain announced its support for Bitcoin, allowing holders of the world’s most valuable cryptocurrency to start enjoying DeFi capabilities. The platform aims to unleash BTC’s potential, allowing holders to stake, borrow, lend, provide liquidity and bridge their assets in a seamless and low-cost way.
Merlin Chain integrates the ZK-Rollup network, decentralized oracle networks, and on-chain BTC fraud-proof modules to offer bitcoiners the opportunity to enjoy DeFi while retaining the security proficiency that the Bitcoin Layer 1 chain offers. This opens up opportunities for Bitcoiners, who have had to wait for years, to enjoy DeFi capabilities like other blockchains, mainly Ethereum.
With the constant battle between the two largest cryptocurrencies raging on – Bitcoiners arguing for the superior security its chain offers and Ether heads the DeFi sector – Merlin Chain combines the best of both worlds. Following its launch, Bitcoiners will enjoy abundant yield-generating avenues, including staking rewards, liquidity mining, and yield farming, which was impossible before.
Speaking on the support for BTC assets, Merlin Chain Founder Jeff Yin, praised the steps BTC has made in the past decade and a half but bemoaned the missed opportunities that investors have had in comparison to other blockchain ecosystems.
“Everyone knows bitcoin has been one of the best-performing assets over the past decade, hilariously detonating the cynical predictions of many anti-crypto critics, but holders have missed out on yields that other ecosystems provide,” said Yin. “We are therefore delighted to finally grant BTC investors and hodlers concrete incentives to not just HODL, but earn and participate in the exciting DeFi ecosystem!”
Integrating DeFi into the oldest crypto ecosystem
Merlin Chain allows BTC holders to earn yield simply by bridging their assets to the network using the Merlin bridge (currently in beta). Once bridged, the BTC assets are locked on Layer 1 and receive gas BTC which can be staked into Merlin’s PoS mechanism. This process generates M-BTC, a wrapped bitcoin asset that earns staking rewards akin to stETH.
The M-BTC assets can then be used widely across the DeFi ecosystem. Holders of M-BTC can stake their assets in DeFi platforms and earn yields, supply liquidity to leading DeFi apps integrated with Merlin Chain, explore lending and borrowing using their M-BTC, and bridge SolvBTC assets out to Bitcoin Layer2 networks like Linea to earn rewards.
“The use cases we have unlocked effectively mimic those of Ethereum’s mature DeFi ecosystem,” said Yin. “Only now, they are powered by the security and scarcity of the Bitcoin network, and tap into probably the most ardent crypto user base that exists.”
Unlocking the DeFi ecosystem for Bitcoin holders
In the past month or so, Merlin Chain has transacted over $13 billion worth of BTC via its bridge while over $700 million worth of BTC has been distributed from Merlin out to Layer2 networks offering complimentary rewards. In addition, the platform boasts over $2.7 billion in total locked value (TVL) across its DeFi ecosystem.
The blockchain is also in strategic partnerships with some of the leading crypto custodians and platforms including FireBlocks, Cobo, Polygon, Lumoz, and Bitmain subsidiary Antalpha. Merlin Chain also has an extensive list of investors including ViaBTC, Kucoin Exchange, Foresight Ventures, OKX Ventures, etc.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
