There was a time when decentralized finance (DeFi) was prominently on the Ethereum (ETH) blockchain. At this point, many of those who wanted to access DeFi using bitcoin (BTC) could only do so using so-called wrapped versions of BTC or a special token representing one bitcoin. However, the Bitcoin ecosystem has evolved, and projects building around Bitcoin DeFi have increased viability.
Read on to discover a list of three Bitcoin DeFi apps you can use to explore decentralized finance and earn a yield on BTC.
3 Bitcoin DeFi Apps That Enable You to Earn Yield
Several Bitcoin DeFi apps have emerged, allowing users to earn yield on their holdings. This article introduces three of these apps. We will explore their features and how they can help you grow your BTC holdings.
Sovryn
Sovryn is a Bitcoin DeFi platform built on the Rootstock (RSK) sidechain, which offers various crypto-native financial services, such as lending, borrowing, trading, and yield farming, all while ensuring users maintain control of the private keys to their BTC.
Sovryn allows users to earn yield by staking their bitcoin or providing liquidity.
Features
Decentralized Trading
Sovryn users can trade a variety of Bitcoin-based assets on the RSK network in a decentralized manner. This means that trading happens directly between users without the need for a central authority, enhancing security and privacy.
DeFi Staking
Users can stake the native token of Sovryn, SOV, to earn staking rewards. By participating in staking, users can passively grow their holdings over time.
Zero-Interest Loans
Sovryn offers zero-interest loans using bitcoin as collateral, allowing users to borrow stablecoins without losing their bitcoin. Once the loan is processed, borrowers can deposit the funds into a stability pool, which not only secures their loan but also earns them additional rewards.
Cross-Chain Bridge
Sovryn features a bridge that allows asset holders from other networks, such as Ethereum, to join and benefit from the platform’s yield-earning opportunities. This increases the utility and accessibility of the platform.
ALEX
ALEX is a DeFi platform built on the Bitcoin layer Stacks that aims to provide users with yield opportunities through liquidity pools, staking, and automated market making (AMM).
Users can earn yield by participating in various liquidity pools, staking their tokens, and engaging in yield-farming activities.
Through Stacks, the platform leverages the security and stability of the Bitcoin network, providing a robust environment for decentralized finance activities.
Features
Launchpad
ALEX provides a platform where verified projects can introduce their tokens and distribute them through a lottery-based system. This method helps to make token distribution more fair and transparent, giving all participants an equal opportunity.
Orderbook
ALEX features an off-chain order-matching engine that makes the usually slow asset-swapping process faster.
Cross-Chain Bridge
ALEX connects bitcoin with other blockchains by wrapping assets from different networks and creating ALEX versions of these assets. The original assets are protected using a multi-signature wallet, which enhances security.
Bitcoin Bridge
ALEX allows Bitcoin to interact with smart contracts by incorporating it into its layer 2 network. This integration enables BTC to be used in decentralized applications (dapps) and other smart contract functionalities.
Arkadiko
Arkadiko is another DeFi platform on Stacks that focuses on providing yield generation and decentralized borrowing services. Users can earn yield by staking their bitcoin or other supported assets in the Arkadiko protocol.
Additionally, Arkadiko offers a unique feature called self-repaying loans, where the collateral used for borrowing can earn yield, gradually repaying the loan over time.
Features
Liquidation Pool
Users can deposit Arkadiko’s USDA stablecoin into a liquidation pool from their DeFi wallet and earn DIKO, the protocol’s native token, as a reward. The funds in this pool generate rewards through staking, which are then used to pay off loans, providing a beneficial cycle for participants.
Arkadiko Swap
Arkadiko Swap is an automated market maker that facilitates trading in USDA pairs. Users can stake their holdings within this AMM to earn DIKO rewards, enhancing their investment returns through active participation.
Redemption
The protocol offers a redemption feature where users can exchange their USDA for USD. This process involves paying redemption fees, allowing users to convert their digital assets back into traditional currency.
Conclusion
Bitcoin’s robust security and decentralized nature make it a popular choice for DeFi projects. These projects aim to give users opportunities to earn returns on their bitcoin holdings.
The Bitcoin DeFi platforms listed here offer various methods for users to utilize their digital assets effectively. Before deciding on a platform, it is crucial to thoroughly understand each project’s workings and associated fees to make an informed choice.
