Ethena partnered with Derive, the leading on-chain options protocol, to integrate USDe as yield-bearing collateral for options trading and launch new structured products. 

The S&P 500 gained 0.05%, reaching another record high as investors analyzed strong October job data. Focus now turns to upcoming labor market reports and Fed Chair Powell's speech on Wednesday. Coindesk Indices, an index measuring broader cryptocurrency market performance was down by 0.38%, with Bitcoin and Ether dropping by 0.002% and 0.05%, respectively in the past 24 hours.

Today's top performer is TRX, which surged 68.6% after TRON DAO was recognized for its Global Blockchain Innovation at the Wiki Finance EXPO 2024.

Tron DAO (TRX), launched in 2017, leverages established blockchain technologies like dApps and smart contracts to enhance user experience rather than innovating on network design. It gained notable attention after acquiring BitTorrent in 2018, emphasizing its focus on proven technologies to potentially reshape Web 3.0. At Wiki Finance EXPO Dubai 2024, TRON DAO was honored with the "

" for its exceptional contributions to advancing blockchain innovation worldwide.

Check Out the Latest Prices, Charts, and Data of 

, the leading on-chain options protocol, to integrate USDe as yield-bearing collateral for options trading and launch new structured products. As part of the partnership, Ethena provided a multi-million dollar grant, and sENA holders will receive 5% of Derive’s DRV token supply. Derive, with 75% market share in on-chain options, processes $250M weekly volume and supports advanced financial products. This collaboration strengthens Ethena’s ecosystem, promoting USDe adoption and enhancing DeFi innovation with Derive’s expertise and composable financial tools. Ethena invites builders to join its growing network.

Yesterday, the BTC Spot ETF saw a total outflow of $17.3 million, with GBTC showing no flow and Non-GBTC experiencing an outflow of $17.3 million.

 will be available for claim on December 6, 2024, at 10 AM UTC. A total of 750 million $F tokens (7.5% of the supply) are allocated for eligible participants. The airdrop will be fully unlocked immediately. Eligibility includes SynFutures v1 and v2 users, v3 Oyster Odyssey points holders, long-term active users, and winners of select community campaigns. For more details, visit the official claim site and the 

Beginner

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Ethena Partners with Derive to Boost USDe Adoption and Enhance DeFi Innovation

As Bybit celebrates its sixth anniversary, the exchange has solidified its position as a leading player in the cryptocurrency market.

As Bybit celebrates its sixth anniversary, the exchange has solidified its position as a leading player in the cryptocurrency market. With significant growth in both its user base and variety of trading products, Bybit is not only expanding its offerings, but also enhancing its market influence. This article highlights the attached report’s key messages, focusing on user growth, spot trading, perpetual futures and options trading.

Since its inception in 2018, Bybit’s user base has experienced explosive growth, surpassing 60 million users by Q3 2024. This remarkable increase — from 20 million users in late 2023 — underscores both the platform's appeal and the growing global interest in cryptocurrency trading.

Several factors have contributed to this user growth. First, Bybit's continual innovation and its introduction of new trading products have attracted a diverse range of traders. Additionally, the platform’s user-friendly interface and robust educational resources have made it accessible to newcomers in the crypto space.

Moreover, the rising popularity of cryptocurrency, as well as favorable market conditions — such as the anticipation surrounding Bitcoin Spot ETFs — have drawn more users to the platform. The report indicates that the influx of new users has led to increased activity, further driving demand for various trading pairs.

Spot trading on Bybit has seen significant expansion, with daily volumes exceeding $10 billion by 2024. This growth is particularly notable given the turbulent market conditions that have characterized the past few years. The report highlights that spot trading volumes grew steadily, especially during bullish market phases, driven by heightened interest in altcoins alongside Bitcoin.

The number of available spot trading pairs has more than doubled from 2022 to 2024, catering to the diverse preferences of traders. Increased spot pair availability has not only attracted more users, but has also contributed to a robust trading environment in which traders can capitalize on various market opportunities.

Tellingly, the report notes the relationship between Bitcoin's price movements and spot trading volumes. As Bitcoin rallies, there’s a substantial uptick in trading activity for both Bitcoin and altcoins, indicating a capital rotation effect that’s common in cryptocurrency markets.

Perpetual futures remain one of Bybit’s most popular trading instruments, consistently outpacing spot trading volumes. During the March 2024 rally, perpetual trading volume reached nearly $70 billion, highlighting traders' preference for leveraged trading options that these contracts provide.

The appeal of perpetual futures lies in their flexibility, allowing traders to take both long and short positions while utilizing 

 to amplify potential gains. This makes perpetual futures an attractive option for traders seeking to optimize their capital efficiency.

Despite the steady growth in spot trading, perpetual futures have maintained a dominant position in the market. The report indicates that while spot trading volumes have increased, they still lag behind those of perpetual futures, reflecting a strong preference among traders for these derivative products.

Bybit’s continual enhancement of its perpetual futures offerings, including a wider range of trading pairs, has further solidified its leadership in this segment. The growth trajectory of perpetual futures is expected to continue, particularly if market conditions remain favorable.

 market, although smaller than its perpetual futures segment, is experiencing noteworthy growth. Since its launch in 2022, the options market has expanded, reflecting an increasing number of traders willing to engage with more sophisticated trading instruments.

The report reveals that Bitcoin options dominate open interest within Bybit’s options market, with a growing preference for call options over puts. This trend indicates traders’ optimism about Bitcoin’s future price movements, particularly following the recent price rallies.

Solana options, introduced more recently, are also gaining traction, showcasing the evolving landscape of cryptocurrency derivatives. The report highlights a clear upward trajectory in open interest for Solana options, driven by increasing demand for exposure to emerging cryptocurrencies.

As traders become more familiar with options trading, the market is expected to mature, providing further opportunities for innovative trading strategies and 

Bybit’s sixth anniversary marks a significant milestone in its journey as a leading cryptocurrency exchange. With a rapidly growing user base, robust spot trading activity, dominant perpetual futures volumes and burgeoning options market, Bybit is well-positioned for continued success.

These developments not only reflect Bybit’s commitment to enhancing its offerings, but also highlight the broader trends within the cryptocurrency market. As traders seek diverse and sophisticated trading instruments, Bybit’s adaptability and innovation will likely play a crucial role in shaping its future.

Advanced

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Bybit’s 6th Anniversary: A Journey of Growth and Milestones Toward Becoming the No. 2 Crypto Exchange

Bybit Cloud Wallet offers a seamless way to manage cryptocurrencies without having to handle private keys. Learn more about how it works in this article.

Bybit Cloud Wallet makes crypto management seamless for everyone by offering a user-friendly platform for storing and managing cryptocurrencies without the hassle of handling 

 not only enhances security but also simplifies interactions with Bybit Web3 services. In this article, we'll explore how Bybit Cloud Wallet works and its benefits and risks, and provide a step-by-step guide to using the wallet. 

Bybit Cloud Wallet is a custodial digital wallet integrated with the Bybit platform, allowing users to store and manage cryptocurrencies without handling private keys directly. It offers enhanced security and accessibility for web3 interactions.

Bybit Cloud Wallet is a custodial wallet, meaning that Bybit manages the private keys on behalf of its users. This design simplifies the experience by removing the burden of securely storing seed phrases or private keys. It integrates with Bybit accounts to streamline cryptocurrency management and provide secure handling for private keys.

Users can access their wallet by logging into their account and completing the Cloud Wallet setup. A unique wallet address is generated, and the associated private keys are securely stored on Bybit's cloud servers. Once the wallet is configured, users can safely store, manage and transact a variety of digital assets. 

When initiating transactions — such as sending or receiving cryptocurrency — a request is created and securely transmitted to Bybit’s servers. The provider verifies the request using the stored private keys, ensuring it’s been authorized by the rightful owner.

Depositing funds into the Bybit Cloud Wallet is straightforward, and users can transfer cryptocurrencies from other wallets within the Bybit Web3 platform with ease. Withdrawals follow a similarly simple process, whereby users specify the amount and destination address while selecting their preferred gas fees.

The wallet uses standard security protocols to protect user accounts and funds from unauthorized access. While the custodial nature of the wallet makes it user-friendly, it also necessitates trust in Bybit's security practices.

Bybit Cloud Wallet integrates with various Bybit Web3 services, enabling users to trade, 

 (DApps) directly through the wallet’s interface.

Bybit Cloud Wallet offers a range of benefits for users seeking an efficient and secure way to manage their cryptocurrency assets.

While Bybit Cloud Wallet offers numerous advantages, users should also be aware of several inherent risks associated with its use.

: Navigate to the Bybit homepage and log in to your Bybit account. Then, click on the 

tab on the top left corner of the page. 

. This will generate a unique wallet address associated with your account.

Now that you’ve created your Bybit Cloud Wallet, here’s how you can deposit tokens and start interacting with DApps. There are two ways in which you can deposit tokens into your Bybit Cloud Wallet — by transferring from your Bybit Funding Account, and by transferring from your external wallet.

: Please ensure that you already have funds in your Bybit Funding Account before you proceed with the steps below. 

: Hover your cursor over your profile icon in the upper right corner of the Bybit homepage, and click on 

 (Web3) and your Bybit Wallet (Web3) address will automatically be filled. Select your preferred 

and enter the amount you wish to withdraw to your Bybit Wallet (Web3).

: After you’ve checked and verified all details, click on 

Congratulations! You’ve successfully transferred assets from your Bybit account to your Bybit Cloud Wallet!

Let’s use MetaMask and the BNB chain as an example. 

: Navigate to your MetaMask wallet. Then, click on the 

. Click on the copy icon to copy your Bybit Wallet address.

and paste your Bybit Cloud Wallet address into the input box. 

: Please make sure you choose BSC. Otherwise, your USDT and BNB may not be transferred successfully.

Congratulations! You’ve successfully transferred assets from your external wallet to your Bybit Cloud Wallet.

 next to the token you would like to withdraw, and transfer your funds to your Bybit Funding Account.

, enter the amount you would like to withdraw, choose your gas fees and click on 

: Confirm the details, request the verification code and submit your withdrawal request.

 next to the token you would like to withdraw, and transfer your funds to your external wallet.

: Enter the receiving wallet address and the amount, and choose your gas fees. Click on 

: Review the details, submit the verification code and confirm your withdrawal.

: To view your transfer history, hover your cursor over the 

tab in the top-right corner of the Bybit Web3 page, and click on 

: You can check your deposit and withdrawal history under either the 

Who Is Best Suited to Use the Bybit Cloud Wallet?

Bybit Cloud Wallet combines ease of use with robust security measures, making it a suitable option for users who prefer not to manage their own private keys, while still being able to conduct cryptocurrency transactions.

Individuals who are new to cryptocurrencies will find Bybit Cloud Wallet appealing due to its user-friendly interface and custodial nature, which eliminates the need for managing private keys. This accessibility allows users to engage with digital assets without needing extensive technical knowledge.

 services will also appreciate the wallet's integration with various DApps and platforms, allowing for easy interaction within the blockchain ecosystem.

Deciding whether to use the Bybit Cloud Wallet depends upon your specific needs and preferences. If you value security, convenience and the ability to manage multiple cryptocurrencies within a single platform, Bybit Cloud Wallet is a strong choice. However, if you prefer having full control over your private keys and assets, a 

 might be a better option. Consider your priorities and the level of control you desire over your digital assets when making your decision.

Bybit Cloud Wallet offers a secure and convenient way to manage cryptocurrency assets without the complexity of handling private keys. Its seamless integration with Bybit Web3 services makes it ideal for beginners and experienced users alike, enabling easy interactions with DApps and DeFi platforms. While Bybit Cloud Wallet offers strong security and user-friendliness, the risks of using a custodial wallet remain a consideration for those seeking full control over their assets.

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Bybit Cloud Wallet: Seamless Crypto Management for Everyone

USUAL introduces USD0, a stablecoin backed by U.S. Treasury Bills, offering transparency, security, and revenue sharing through its governance token, USUAL.

More than a decade ago, in mid-2014, the first 

 arrived on the stage of the crypto market. These cryptocurrencies were designed to provide stability in the typically volatile world of crypto, and to serve as a bridge between the traditional finance (TradFi) and 

 (DeFi) ecosystems. At the core of their functionality is a mechanism that maintains a close peg to some traditionally valued asset, be it the U.S. dollar, euro or 

Stablecoins have proved to be tremendously popular, with the leading asset in this niche, 

 (USDT), routinely attracting higher trading volumes than any other cryptocurrency — including the mighty Bitcoin. The second most popular stablecoin in the market, 

 (USDC), also enjoys multibillion-dollar daily trading volumes, and ranks among the top 10 cryptocurrencies by market cap.

Despite their popularity, many leading stablecoins — including the dominant USDT and USDC pair — have opaque collateral management mechanisms, are lacking in transparency, don't distribute revenues to the wider user community and are highly centralized in terms of control.

Usual (USUAL) is a DeFi solution launched on the 

 (ETH) blockchain that aims to tackle these deficiencies of traditional stablecoins by offering a 

 (RWA)–backed stablecoin and redistributing protocol revenues among its users. The platform's primary stablecoin — USD0 — is backed by collateral invested mainly in short-term U.S. Treasury Bills; maintains a tight peg to the greenback via these secure investments; has a fully transparent reserve verification system; and opens up additional yield opportunities across a variety of external DeFi protocols via a 

 (USUAL) is an Ethereum-based DeFi platform that offers an RWA-backed, USD-pegged transparent stablecoin, USD0, and distributes protocol revenues among its user community. 

USD0 is backed by collateral invested in RWAs, primarily in short-term U.S. Treasury Bills. The short-term, highly liquid and secure nature of these government-issued assets ensures that USD0's peg to the U.S. dollar isn't likely to be compromised.

Usual has partnered with Hashnote, a Florida-based regulated provider of digital and tokenized fund products, to facilitate secure investment in U.S. Treasury Bills and associated products.

Usual's USD0 is a unique stablecoin product, distinct from the dominant assets in this niche, 

 and USDC. While these cryptocurrencies also maintain fiat reserves to back their value, they’re controlled by centralized corporate entities, and their USD reserves are exposed to the traditional banking system, with poorly known levels of risk associated with them.

, whose values aren’t backed by fiat assets, and which are highly dependent upon underlying protocols’ activity to maintain their pegs. In many cases, these algorithmic coins lose their pegs and stability when the underlying lending or borrowing activities on their protocols are manipulated by 

 or become subject to panic-driven runs. The most notorious example was the 2022 

Usual’s platform also offers a liquid staking version of USD0, USD0++, which can be used throughout the DeFi ecosystem for additional yields. It has partnered with several Ethereum DeFi protocols to expand the universe of platforms where USD0++ can be utilized, including 

Usual also has another distinct feature: the protocol aims to distribute future revenue among its users, specifically among holders of its upcoming USUAL 

The platform was developed by the France-based Usual Labs, a blockchain development outfit co-founded by Adli Takkal Bataille, Hugo Sallé de Chou and former French parliament member Pierre Person. Usual launched the USD0 stablecoin in mid-2024. In late November 2024, the platform introduced the USUAL governance token, set to be launched sometime in mid-December 2024.

The introduction of the USD0 stablecoin is a potentially paradigm-changing event for the crypto market. This innovative asset adopts many of the advantages of fiat-backed stablecoins, but also resolves many associated issues. Usual Labs has targeted several goals with the advent of USD0 and its unique working mechanism.

One key aim is to change the way that profits from decentralized stablecoin operations are shared. Usual's revenue is to be shared with the user community — namely, the holders of the USUAL token. All the revenue generated from the platform's operations flows to its treasury. USUAL holders are in charge of this revenue, making them eligible to decide on the actual distribution. In essence, owning USUAL entitles you to a share of potentially 100% of revenue generated by the platform.

This starkly contrasts with the way that other fiat-backed stablecoins, notably USDT and USDC, operate. All the revenues generated from these stablecoins are appropriated by their respective founding companies — Tether Limited for USDT, and Circle Internet Financial Limited for USDC. While the risks from the operations of these assets are externalized and shared with holders of the stablecoins, the revenues are internalized and scooped up by Tether and Circle.

Another aim of the Usual project is to bring transparency to the management of collateral that backs the USD0 stablecoin. As a decentralized protocol, Usual provides the transparency of collateral funds' allocation. Again, this contrasts with the opaque nature of the way that USD collateral for some stablecoins is managed. Tether's USDT has particularly 

 in the crypto investor community, as the company has never conducted a full-scale audit for its vast claimed dollar reserves.

Another aim of Usual is to provide a stablecoin that’s completely secure from exposure to the traditional, fractional reserve-based banking system. Some crypto investors have derided the fractional reserve system, whereby only a small proportion of client liabilities are actually held at any given time by banks. Projects like USDT and USDC rely heavily on the traditional banking system, which backs their U.S. dollar reserves. These banks naturally rely on fractional reserves that, at least in the opinion of the most risk-averse investors, exposes them to 

In contrast, USD0 is backed by short-term U.S. Treasury Bills, an asset class that’s fully backed by the U.S. government's pledge. These are considered among the safest assets in the world of finance, as the U.S. government has never yet defaulted on its payment obligations. Unlike USD deposits in banks, USD0's Treasury Bill–based collateral isn't exposed to the risks of the fractional reserve system. As such, the coin's collateral is based on a government-backed asset, providing a level of security that most fiat-based stablecoins in the market are unlikely to match.

Usual uses a three-token model to power its operations and services. There's the fiat-backed USD0 stablecoin, which is protected by Treasury Bill collateral. The second asset is the USD0++ LST, a derivative of USD0 issued upon staking the latter. And there’s the USUAL governance token that grants holders the right to participate in decision-making on the protocol's rules and future direction.

The Usual protocol provides two ways to mint the USD0 stablecoin:

:This is normally done by investing in the USYC fund and using it as collateral, then depositing it into the mint engine to mint USD0. USYC is an on-chain representation of the Short Duration Yield Fund (SDYF) provided by Hashnote, a regulated provider of tokenized fund products. USYC/SDYF is based mainly on U.S. Treasury Bills with short-term maturity.

:You can also mint USD0 indirectly on a 1:1 basis by supplying the USDC stablecoin as collateral.

Redeeming the stablecoin is also possible in two ways — directly through the protocol, or via the secondary market. When using direct redeeming, you simply withdraw your RWA collateral using the protocol's interface. Alternatively, you can sell USD0 for USDC or USDT via a secondary market platform, such as 

 (CRV), a popular DeFi protocol that specializes in stablecoin assets.

USD0++ is an LST representation of USD0. When you stake USD0 on the platform, you’re issued USD0++, which is fully composable and can be used on various Ethereum-linked protocols to earn additional yield. You can lock USD0 to get issued USD0++ for four years. However, you’re also free to unstake at any time.

Staking rewards from locking USD0 to get USD0++ are paid in USUAL tokens. Usual's model rewards long-term staking commitments, as users are encouraged to stake for at least six months — this is the minimum period of staking required to qualify for what the protocol calls the 

 (BIG). BIG essentially refers to a guaranteed yield from native staking of the underlying RWAs on the Usual protocol. When the period concludes, the staker can choose to collect the yield in either USUAL or USD0.

Yields start accumulating from day one of staking. Although users are free to unstake at any time, those who do so before the six-month minimum period will forfeit accumulated rewards.

USUAL is the Usual protocol's governance crypto token. It was unveiled on Nov 19, 2024, and is currently in pre-market mode only. It's expected that USUAL's public launch will occur in the near future. As USUAL is a community-first token, 90% of the tokens are distributed to the community with only 10% allocated to insiders (team and investors).

Usual feeds its revenues into its protocol's treasury, which is controlled by the USUAL holder community. As such, USUAL holders own 100% of the platform, a significant departure from the system used by many other stablecoin issuers, whereby a corporate entity earns all or the majority of the profits. 

Additionally, Usual is designed such that its protocol will incentivize early adopters and long-term holders. As the TVL of USD0 increases, Usual will generate more revenue. The emission rate of USUAL is also disinflationary, gradually reducing as the TVL of USD0 rises and enhancing the scarcity of the token, which will subsequently lead to a boost in its value.

At the initial stages of the platform's market presence, Usual Labs is largely responsible for governance decision-making. However, this function will be taken over by USUAL holders, likely in the form of a 

Although called a governance token, USUAL has additional functionalities beyond supporting the protocol's governance processes. It’s also used to distribute yields from staking ( as discussed in the section above on USD0++). Rewards from the protocol's loyalty point campaigns are also airdropped in USUAL. 

In addition, USUAL can be staked for additional governance rights and rewards. USUAL stakers will receive 

, from which they can earn a portion of USUAL emissions and 50% of the fees generated from people unstaking their Usual assets (USUAL or USD0++).

USUAL's maximum and total token supply are specified at 4 billion. The initial circulating supply during the early days of the token's pre-market trading is close to 500 million as of Dec 2, 2024.

The Usual protocol ran a points-based reward program from July through the last week of November 2024. Called the 

, it let early users accumulate points by acting as liquidity providers before the protocol's full public launch phase. The accumulated Pills points will determine users' eligibility for a USUAL airdrop, slated for mid-December.

The airdrop will allocate 8.5% of the token's supply to eligible users — the more Pills points you've earned, the more USUAL tokens you’ll receive.

During the token's pre-market trading stage, Bybit is one of the rare platforms that’s allowing you to access it. As of Dec 2, 2024, 

 on Bybit's Pre-Market Perpetuals Trading platform as a 

 lets you invest in a variety of upcoming cryptocurrencies via USDT-based perpetual futures contracts before these assets are listed on the main spot or derivatives markets. Using this platform, you can access a range of promising new crypto assets before they become publicly available. There are two main limits enforced by Perpetual Pre-Market — the position size cannot exceed $250,000, and leverage is permitted up to 5x.

Stablecoins are one of the oldest asset types in the crypto industry, while RWAs are a much newer trend that’s growing increasingly popular among investors. The Usual project has decided to marry these two areas, providing an RWA-backed, USD-pegged stablecoin — USD0. The concept of using an RWA for stablecoin collateral may not be totally unique. However, using a highly secure asset such as U.S. Treasury Bills with short-term maturity is something that truly distinguishes the Usual protocol.

Distributing revenue among the governance token holder community is also a refreshing innovation in a niche dominated by providers who largely internalize protocol incomes. Currently, the stablecoin market is heavily dominated by USDT and USDC, with 

 (FDUSD) also recently posting impressive, multibillion-dollar daily trading volumes. All three of these stablecoin issuers lack a mechanism to share revenue with their users. A major stablecoin provider that utilizes a democratized way of sharing protocol revenues with the user community is a deserted area, one that the Usual platform is keen to claim.

With all these merits of the Usual protocol, the upcoming USUAL token is a promising and potentially rewarding asset. Investors interested in stablecoins grounded in highly secure TradFi collateral might want to take a closer look at these new arrivals on the block — the USD0 stablecoin and the USUAL governance token.

Intermediate

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Usual (USUAL): A New Model of Collateralized Stablecoin Ownership

Bybit Learn

Bitcoin

Bitcoin's DeFi ecosystem, known as BTCFi, is made up of a variety of projects such as BitVM, Bitlayer, Bitcoin Ordinals and the Runes protocol.

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For years after its introduction in 2009, the 

 (BTC) blockchain remained an environment used exclusively for asset transfers and storage. The rise of 

 (ETH) as an alternative to traditional financial systems in 2017–2018 seemed to ignore Bitcoin, the world's oldest blockchain, and its vast potential. Many at that time assumed that Bitcoin's relevance in the industry would decline, as 

 (DApps) elevated the status of Ethereum. However, it didn't take long for the Bitcoin community to come back with answers, some utilizing sidechains and other 

 solutions, and others leveraging the chain's own native mechanisms.

In the past few years, the ecosystem of apps and decentralized platforms that enable Bitcoin-focused DeFi — or BTCFi, as it's come to be known — has flourished. BTCFi is now a growing world, featuring efficient payment solutions, smart contract sidechains, fungible token protocols and even a technology for issuing Bitcoin-based NFTs. 

The exciting world of BTCFi still lacks the sophistication and programmability muscle of Ethereum's DeFi sector, but it's catching up fast. In this review, we’ll take a closer look at some of the critical apps and platforms that power BTCFi, a sector that leverages the potential of the world's largest crypto asset, the BTC coin. We’ll also discuss the key differences between the emerging BTCFi ecosystem and the established Ethereum DeFi universe.

Understanding Decentralized Finance (DeFi)

The launch of Ethereum in 2015 is often considered the starting point for the DeFi industry. For the first time, a popular smart contract–capable blockchain arrived on the scene, opening up opportunities for DeFi solutions such as 

 (DEXs), lending and borrowing protocols, and other crypto-based finance operations. However, it wasn't until 2017–2018 that the DeFi field really took off, with the introduction of pioneering protocols like 

These DApps and their business models were made possible thanks to Ethereum's smart contract functionality, which enabled complex logic and transaction execution capabilities on the blockchain through the 

While early DeFi protocols represented a wide variety of niches, five areas quickly emerged as the most popular and dominant within the overall DeFi ecosystem:

A few years later, another major category — 

 solutions — also became a prominent niche within the DeFi industry.

Bitcoin missed the early DeFi revolution, largely due to its absence of native smart contract capabilities. However, as early as 2018 and 2019, the first solutions aimed at enabling Bitcoin-based DeFi, or BTCFi, began to emerge. Some of these projects revolved around smart contract–capable Layer 2 sidechains linked to the Bitcoin network. Others championed the idea of 

 (e.g., wrapped Bitcoin, or WBTC) that could be transferred to Ethereum and used within this chain's leading protocols, such as AAVE, Curve Finance and Compound for collateral provision, swaps and other popular DeFi transactions.

The BTCFi field received a major boost in November 2021 with the introduction of Bitcoin's 

 upgrade, which introduced the functionality of batching multiple digital signatures for processing. These signatures are used on Bitcoin to verify transactions. Taproot’s practical advantages include significantly improved transaction processing and less bloat on the network. As a result, more complex transactions could be processed in less time and with more modest block space requirements. In turn, the ability to process more transactions in a more complex way led to a flurry of BTCFi activity and the emergence of new projects on the network.

In the past couple of years, newer BTCFi projects — such as BitVM, Bitlayer, Bitcoin Ordinals and the Runes protocol — have further advanced the sector, bringing it much closer to Ethereum's still dominant DeFi capabilities.

Compared to Ethereum's giant DeFi ecosystem, BTCFi is still a small world. However, BTCFi is catching up quickly, despite its somewhat late start. Below are some of the key points that distinguish Bitcoin DeFi from Ethereum DeFi:

Launched in July 2024 by the Lighting Labs team, who also created Lightning Network (which we'll cover shortly), 

 is a protocol built on the Taproot upgrade that enables the issuance and transfer of a wide variety of crypto assets on the Bitcoin blockchain. These assets are stored within 

 (UTXO), and can easily be transferred as part of standard Bitcoin transactions. The protocol stores the metadata off-chain to reduce the load on the Bitcoin network.

While Taproot Assets was originally built to facilitate 

 settlement on Bitcoin, users can now use it to create all kinds of assets on Bitcoin, including both fungible tokens and 

 (NFTs). These assets can easily be transferred as part of regular Bitcoin transactions, and can also be issued and transferred within Lightning Network for low-cost, highly scalable transfers, thereby running little risk of congesting the Bitcoin network.

 is used not only for Taproot Assets transfers, but also for a wide variety of Bitcoin transactions. Launched in 2018 by Lightning Labs, this Layer 2 solution lets users transact much more efficiently and cost-effectively as compared to native Bitcoin transfers. When two transacting parties use Lightning Network, the platform establishes a dedicated one-to-one channel for them for efficient communication. The parties commit to the channel by first bonding an amount of BTC on the underlying Bitcoin blockchain to open the channel. Then, the channel is opened and can be used for transacting, with all of the transactions processed 

The off-chain transaction mode allows Lightning Network to swiftly process a large amount of transfers at low cost, thus avoiding delays and high fees typically associated with the Bitcoin network. In fact, some of the most popular use cases for this solution are for micropayments and high-volume transfers.

Ethereum's DApp functionality has been supported by the blockchain's processing engine — EVM. For years, Bitcoin lacked a processing engine that would support programming logic and smart contracts. This all changed with the introduction of 

BitVM is a computational engine that’s designed to enable Turing-complete programming logic on Bitcoin. This opens up the opportunity to directly create DApps with advanced functionality and logic on the blockchain. While BitVM supports somewhat sophisticated programming logic for Bitcoin, it has one key limitation — the engine natively supports only two-party interactivity.

This limits, to a certain degree, the kind of DApps that can be used with BitVM. Any solutions that require only two-way interactions (e.g., one-to-one payment systems), can work well with the engine. However, more complex DApps, which normally require multi-party transactional ability, can't natively be accommodated by BitVM. Despite this limitation, BitVM is one of the key innovations opening up ways to create functional DApps on Bitcoin.

 (STX) is a Layer 2 solution that’s capable of hosting fully-fledged smart contract functionality and DApps on Bitcoin, as well as leveraging Bitcoin for security and settlement. This allows DApps hosted on Stacks to utilize the network's smart functionality while benefiting from the security of Bitcoin’s PoW network.

Stacks has its own block validation model, called proof of transfer (PoX). Stacks' blocks are anchored to Bitcoin, with the latter ultimately used for transaction validation. Using its anchor to Bitcoin, Stacks settles all transactions on Bitcoin via periodically transferred batches.

One area in which smart contracts have been used extensively on Ethereum is for NFTs. Due to Bitcoin’s lack of native smart functionality, its environment had been deprived of NFTs up until early 2023. That’s when developer Casey Rodarmor introduced the 

 protocol, a unique way of creating NFT-like assets on Bitcoin without using smart contracts.

 — the smallest unit of a Bitcoin — on the network can be uniquely identified from its position within each mined block. The Ordinals protocol specifies a way to inscribe pieces of data (e.g., text or image) into a uniquely identifiable satoshi, essentially opening up a route to creating Bitcoin-based distinct digital artifacts, such as NFTs.

As of mid-September 2024, the Ordinals protocol remains the primary way to create Bitcoin NFTs. The 

 of these digital artifacts on Bitcoin’s network is approximately 75 million.

 is another innovative technology introduced by Casey Rodarmor for the Bitcoin ecosystem. In the section on Taproot Assets above, we noted how that protocol leverages Bitcoin UTXOs to create tokens. The Runes protocol works similarly at the basic level and is also compatible with Lightning Network. 

Runes establishes a way to create fungible crypto assets on Bitcoin by attaching key token properties to Bitcoin UTXOs. However, there are significant differences between Taproot Assets and Runes. Unlike Taproot Assets, which stores token metadata off-chain, Runes is a purely on-chain solution. It's been lauded as a highly secure and lightweight way to handle fungible crypto assets on the Bitcoin chain.

As of mid-September 2024, there are close to 100,000 Runes tokens in existence, with the leading token, 

 (DOG), having amassed a market cap of around $257 million. The majority of popular Runes tokens are classified as meme coins.

 is a Layer 2 blockchain platform that leverages the BitVM engine described above. It represents the first widely known implementation of BitVM technology. Bitlayer acts as a processing medium that handles transactions and then settles them on the underlying Bitcoin chain. The platform, however, isn't just about BitVM — it also features a high degree of compatibility with the Ethereum ecosystem. Using its Layered Virtual Machine (LVM) technology, Bitlayer makes it easy to port Ethereum-based solutions to the Bitcoin ecosystem.

Programming code written in an EVM-compatible language like Solidity or Vyper easily compiles into a Bitlayer-compliant format, which greatly simplifies DApp porting and communicating between the Ethereum and Bitlayer environments. As such, Bitlayer is among the few platforms that enjoy both 100% EVM compatibility and the much-heralded security of Bitcoin.

Rootstock (RSK) is a Layer 2 solution that combines EVM compatibility with Bitcoin's security protection. With its mainnet launch dating back to January 2018, Rootstock is the oldest Layer 2 sidechain servicing Bitcoin. It features smart contract functionality, and is one of the key ways for developers to launch and operate Bitcoin-linked DApps.

The Rootstock blockchain's primary crypto asset, RBTC, is pegged to BTC at a rate of 1:1. Users can transfer their BTC to Rootstock, which then converts it to RBTC for use within the platform's ecosystem. At any time, users can reclaim their BTC and transfer funds back to Bitcoin. Besides smart contract functionality, what sets Rootstock apart from the native Bitcoin chain is its superior scalability and lower transaction costs. For instance, while the standard block confirmation time on Bitcoin is about 10 minutes, it's just 30 seconds on Rootstock. 

Rootstock’s shorter transaction confirmation time and full EVM compatibility make it an excellent environment for DApps to tap into the potential of the BTC ecosystem. At the same time, the platform has specifically focused its efforts on enabling DeFi use cases and attracting partner projects in the niche of decentralized trading.

Like Rootstock, Liquid Network is another longtimer among Bitcoin Layer 2 platforms. It launched its mainnet in September 2018, and has proven to be among the leading solutions to address Bitcoin's high transaction costs and poor scalability. As with Rootstock, Liquid Network is a Bitcoin sidechain that maintains a BTC-pegged asset, Liquid Bitcoin (L-BTC). Users can swap their BTC for L-BTC and then use the funds within Liquid Network's ecosystem for faster and more reliable asset transfers.

However, similarities between the two sidechains end here. Unlike Rootstock, Liquid Network has no native smart contract functionality. Its platform is designed primarily to improve the scalability and costs of asset transfers and to issue stablecoin assets. Like Lightning Network, it focuses on payments and transfers. The difference, however, is that Lightning Network is optimized for small or micro transfers, while Liquid Network is more suitable for medium and large asset transfers.

 (BADGER) is a leading DeFi platform that has championed the concept of linking the Bitcoin and Ethereum worlds. Launched on Ethereum, Badger’s key platform leverages wrapped Bitcoin assets, such as 

, across Ethereum's rich ecosystem of DeFi apps. While not a native Bitcoin solution, Badger plays a vital role in expanding the utility of BTC to additional ecosystems beyond the Bitcoin network.

BTC (or rather its wrapped variations) is used on Badger as a form of collateral for DeFi operations. Badger offers a dedicated bridging solution, the Badger Bridge, to easily transfer BTC to the platform wrapped as one of the two popular wrapped tokens — RenBTC or WBTC. These tokens can then be used in various DeFi apps to earn yield or act as collateral. Both of the wrapped Bitcoin tokens supported by Badger are quite popular, although RenBTC is a less prominent player in the field than WBTC. Currently the second-highest-capped wrapped token in the industry, WBTC enjoys vast popularity with a market cap of $8.6 billion.

Bitcoin DeFi apps offer several distinct advantages to traders, developers and project operators. First, there's the security factor — Bitcoin is considered a highly secure environment even by the stringent standards of the blockchain industry. Arguably, Bitcoin has an advantage in this area, compared to Ethereum and most other smart contract chains. Secondly, since BTCFi is a less mature and overcrowded environment than Ethereum DeFi, there are unique opportunities for traders to benefit from its less efficient markets. 

The third advantage is relevant specifically for NFT enthusiasts. Unlike Ethereum NFTs, which store their artwork or other media off-chain while the tokens’ metadata is kept on Ethereum, Bitcoin NFTs — supported by the Ordinals protocol — are stored fully on-chain. All of the metadata and actual media files related to an NFT are kept on Bitcoin. This provides benefits both in terms of security and greater intellectual rights protection.

What Is Bitcoin DeFi: The Rise of BTCFi

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