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RSK Is Changing the Bitcoin Network Into a Paradise for Stablecoins and DeFi

11-Apr-2022 By: Simran Mishra
RSK Is Changing the

Stablecoins have grown in popularity in recent years owing to their intrinsic characteristic that protects investors from the volatility of the crypto market. They are used for a variety of purposes and are available on several blockchain platforms.

Stablecoins, decentralized finance (DeFi), non-fungible tokens (NFTs), and other smart contract-powered primitives were not previously available on the Bitcoin network. However, with the introduction of RSK, the first smart contract platform secured by the Bitcoin network, Bitcoin aficionados may now take advantage of the endless options in DeFi, including stable coins, without having to migrate to a different blockchain.

Bitcoin (BTC) is the most liquid cryptocurrency in existence right now. It already has the highest market value and the most users. Stablecoins may thus exploit the inherent properties of the Bitcoin network, such as decentralization, censorship resistance, immutability, and unrivaled security, by utilizing BTC as collateral. Furthermore, by using BTC as collateral, the counterparty risks associated with stable coins can be reduced to some extent.

RSK: The Making of a Goliath

RSK is one of the platforms that is helping to level the playing field for Bitcoin fans as open finance (OpFi) grows. In 2021, the number of people joining RSK's smart contract ecosystem increased significantly, increasing the quantity of BTC pegged to RSK from 546 to 2,520 — a positive trend given that DeFi is still in its early stages on the Bitcoin blockchain.

RSK has also established an interoperability bridge with Ethereum to broaden its range of DeFi services, allowing a two-way transfer of any token between the RSK and Ethereum ecosystems. As a result, Ethereum users may transact with rBTC without difficulty, obtaining indirect exposure to the Bitcoin DeFi ecosystem. This bridge will also be beneficial to RSK.especially those using Ethereum-based stable coins such as DAI.

The Bitcoin DeFi movement is seen as the next important step forward for DeFi 2.0. In this environment, RSK has positioned itself as the go-to option for developers searching for solutions to Ethereum's mounting challenges, with its suite of stable coins and DeFi products partnered with the Bitcoin network's time-tested security and liquidity.

RSK provides full EVM (Ethereum Virtual Machine) compatibility, which means developers can smoothly transfer their Solidity-based dApps (decentralized apps) to Bitcoin without making any substantial modifications to the underlying code. The two-way peg with Bitcoin allows developers to make use of both the RSK and Bitcoin networks.

In terms of scalability, Ethereum typically provides a throughput of 30 TPS (transactions per second), which can be increased depending on network congestion. At the same time, RSK provides up to 100 TPS without sacrificing storage capacity or decentralization. Similarly, in terms of gas expenses, RSK charges up to 42x less than Ethereum's average.

In terms of security, as seen by the recent wave of hacks across DeFi platforms, most blockchain networks that use the PoS (Proof-of-Stake) consensus process are vulnerable to cyber assaults. The Bitcoin network, on the other hand, is among the most secure since taking over the Bitcoin network requires one entity to command at least 51 percent of the hash rate.

This is becoming increasingly challenging as the hash rate rises. RSK is protected by around half of the Bitcoin network's total hash rate, making it the most secure smart contract platform in terms of fighting against 51 percent assaults.

Diego Gutierrez Zaldivar, Co-founder of RSK and CEO of IOVlabs, highlights the advantages of adopting stable coins pegged to BTC: "Bitcoin is the most liquid crypto asset, and it's acknowledged as a store of value." As a result, I believe it is the best type of collateral that can be used in DeFi protocols. If you utilize a stable coin like USDT, you are vulnerable to third-party risk.

The strength of RSK resides in the mix of attributes that we may possibly achieve: top security, high decentralization, high scalability, and cheap cost."

So far, the RSK ecosystem has collected a TVL (Total Value Locked) of more than $134 million, and it is home to some of the most successful stable coin projects, including MoneyOnChain (MOC), Sovryn, and BabelFish.

MoneyOnChain's major assets are the Dollar on Chain (DoC) stable coin. It is collateralized at a 1:1 ratio with BTC, which places it among the finest collateral because BTC's liquidity backs it up. Then there's the RIF Dollar on Chain (RDOC), one of the RIF On Chain DeFi platform's major assets. RDOC employs the RIF token as collateral and is tied to the US dollar at a 1:1 ratio.

The RSK ecosystem also houses XUSD, the USD-pegged stable coin of the BabelFish cross-chain protocol. The XUSD stable coin is a decentralised aggregator and distributor of numerous stable coins that may be traded or redeemed at a 1:1 ratio with any other stable coin as guaranteed by the underlying smart contract.

With RSK's rDAI stablecoin developing as an alternative to Ethereum's excessive transaction costs, you may convert DAI for significantly reduced gas prices (about 15 cents per transaction), making it over 80 times cheaper than trading DAI through the Ethereum network. In addition to these capabilities, the RSK ecosystem is home to the BRZ stablecoin, which is tied at 1:1 to the Brazilian Real (BRL).

Blindex, a multi-currency stablecoin DeFi platform, is also launching a variety of stable coins tied to specific assets using RSK smart contracts. These stablecoins, also known as BD-Stables, are tied 1:1 to the underlying currency. For example, if a BD-Stable is tied to USD, it is denoted as bUSD. It is bAUD for the Australian Dollar, bEUR for the Euro, bJPY for the Japanese Yen, and so on.

The DeFi ecosystem has seen significant alterations in the previous several years as a result of developing technology. Stablecoins, as one of the crypto market's strongest pillars, will play a vital part in the current transition to DeFi 2.0, especially now that they have finally made their way into the ecosystem of the Bitcoin blockchain. thanks to RSK’s smart contract capabilities.

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