On August 22, CKB Chinese (@CKB_CN) held a Space titled "The Stablecoin Ecosystem and Future Outlook of BTCFi," inviting Lee, the head of the Stable++ community, Sawyer, the growth lead of Apro Oracle, Nature, a builder from the Seal community, and Dr. Hongzhou Chen, the Research Lead of CKB Eco Fund.
The Space lasted for over an hour, and for those who haven't had the chance to listen yet, you can catch the audio replay when you have time: *https://x.com/CKB_CN/status/1826603879049691361*
Here are some key points from the guests' discussions based on the audio replay:
Host: Oracles are an important part of the blockchain ecosystem, capable of obtaining and verifying external information and transmitting it to smart contracts on the blockchain, thereby expanding the functionality of smart contracts. Without oracles, smart contracts would be limited to on-chain data. As the Bitcoin ecosystem develops, Sawyer, can a credible and stable oracle service be built within the Bitcoin ecosystem? How does Apro ensure the stability and security of its services?
Sawyer: Absolutely, and the Bitcoin ecosystem must build a credible and stable oracle service. With solutions like CKB being implemented, the Bitcoin blockchain enhances scalability and smart contract functionality, leading to rapid development in applications like DeFi and GameFi. The role of oracles becomes increasingly important, not only for obtaining and verifying external information but also for ensuring accurate data transmission and the normal execution of smart contracts.
Apro Oracle takes several measures to ensure service stability and security:
- Combining strong encryption technology with decentralized data acquisition methods to rigorously verify each data point.
- Price information security: Using TVWAP two-step price aggregation to avoid price manipulation.
- Two-layer network architecture:
- Layer one: A decentralized submitter network that stakes BTC to participate. It will be upgraded in the future to a Babylon-based system to achieve Bitcoin-level security.
- Layer two: A ruling network operated by AVS to handle exceptional situations and failures.
Apro Oracle's ecological positioning focuses on enhancing overall security attributes to ensure robust system operation.
Lee: We at Stable++ are collaborating with Apro, and I would like to ask Sawyer to further introduce what specific services and guarantees Apro has brought to Stable++?
Sawyer: The main service Apro Oracle provides to Stable++ is Price Feed. Specifically, it provides real-time and accurate CKB and BTC price data to Stable++, ensuring that the algorithm can respond promptly, allowing Stable++ to adjust and make decisions based on the latest data during any market fluctuations to maintain stability. We aim to provide comprehensive guarantees for Stable++, helping it maintain stable and effective operations in a complex market environment.
Lee: Apro is also a strategic partner of CKB. May I ask, Zhou Zhou, what does CKB value most when choosing strategic partners?
Dr. Hongzhou Chen: When the CKB Eco Fund selects partners, we mainly consider three aspects:
- Technical Aspect: Taking Apro as an example, its TVWAP price aggregation model is suitable for the UTXO model, and Apro places great importance on the native security of Bitcoin and data security. We also recognize the synergistic effect of Apro's oracle technology with CKB and the Bitcoin UTXO model. Additionally, Apro can support our Lightning Network in the future, which can handle price changes in rapid asset transfers.
- Market Aspect: We focus on innovation potential and market competitiveness. The projects we choose must have a deep understanding of the Bitcoin ecosystem, meet market demands, and emphasize innovation capabilities within the Bitcoin ecosystem rather than simply replicating the Ethereum model.
- Cognitive Vision Aspect: When selecting partners, we consider whether both parties have a consistent long-term vision, and the Apro team shares a common technical pursuit with CKB.
Additionally, during the Token 2049 conference held in Singapore this September, CKB will also host its own side event, subtitled Strikes Back, which is a title from Star Wars. Now is the time to launch a counterattack against the EVM model, and we need partners like Apro to participate together. We not only want to achieve the existing functionalities of Ethereum but also innovate to solve its centralization issues. The Bitcoin ecosystem provides a new implementation path, such as support from the Lightning Network, which will help revitalize the decentralization concept of the entire cryptocurrency industry.
Host: Thank you, Zhou Zhou, for the introduction. In addition to the side event mentioned earlier, there are also upcoming offline events: on September 2 in Korea and on September 19 in Singapore:
- Bitcoin Community Assembly — Sealul registration link: https://lu.ma/agmuimt5
- Bitcoin Singapore: Strikes Back registration link: https://lu.ma/ndem2rj8
The Seal2Earn event has received very positive market feedback. What is Nature's view on this market response? How do you assess the stablecoin ecosystem of Bitcoin and its future development prospects?
Nature: The Seal community has developed the first Bitcoin IBO issuance platform, Seal2Earn, and is currently conducting the staking airdrop activity for the first project, Stable++. The first phase of staking attracted about 1.19 million Seal tokens, and the second phase has exceeded 8 million Seal tokens.
Stablecoins are an indispensable part of the Bitcoin ecosystem. Stable++ adopts the RGB++ solution, which has high security, and the over-collateralized stablecoin RUSD issued by Stable++ is the first native stablecoin in the Bitcoin ecosystem, which I hold very high expectations for. Stablecoins play a positive role in reducing volatility in the cryptocurrency market and promoting large-scale adoption, providing more choices for individuals and institutions, so stablecoins are an unavoidable topic across various public chains and technical solutions.
One future vision I have for stablecoins in the Bitcoin ecosystem is that they can be purchased seamlessly without entry barriers, circulate freely on the UTXO application chain, and form a perfect closed loop between BTC and CKB using the RGB++ solution.
Host: What is the Apro team's view on the current stablecoin ecosystem and its future development? How does Apro plan to further support and innovate the stablecoin ecosystem?
Sawyer: I have always believed that stablecoins are a very important part of the entire crypto ecosystem. Stablecoins not only provide a stable medium for transactions but also bring reliability for value storage. This is crucial for the large-scale application of blockchain technology. We can see that Tron has secured a solid market position through stablecoins.
The development of stablecoins in the Bitcoin ecosystem is exciting. For example, Tether plans to develop stablecoins based on the RGB protocol, demonstrating the ongoing innovation potential in this field. The launch of algorithmic stablecoins like Stable++ is also highly anticipated.
As Apro Oracle, we understand the importance of stablecoins, so we are committed to promoting their development. We plan to act as a "bridge" connecting different ecosystems. By providing secure and accurate price feed services, we can help quality stablecoin projects expand liquidity and ecological coverage. We also plan to facilitate the connection between stablecoins and potential ecosystems, such as introducing TON, BNB, and others. We aim to innovate further in the stablecoin field, particularly focusing on enhancing the security of stablecoins within the entire blockchain ecosystem.
Dr. Hongzhou Chen: Stablecoins are crucial for any blockchain project and the entire economic system. Just like the US dollar or gold in the real world, stablecoins are the foundation for the operation of the financial system.
The Rand Corporation once predicted that the large-scale adoption of cryptocurrencies only requires two currencies: Bitcoin and stablecoins within the Bitcoin ecosystem. Bitcoin attracts attention as a value flag, while stablecoins provide the foundation for the stable operation of the economic system. Stablecoins not only facilitate value flow across projects and chains but also enable value transfer across time dimensions. Together with Bitcoin, they form the minimum viable product (MVP) of the economic system.
Decentralized stablecoins hold significant importance in the Bitcoin ecosystem. They provide monetary policy tools for the economic system, complementing fiscal policy tools, giving the Bitcoin ecosystem a central bank-like regulatory capability. Compared to centralized stablecoins, decentralized stablecoins address concerns about asset backing and account freezing, which is highly attractive to many users. RUSD, as a decentralized stablecoin, can use governance tokens and distribution mechanisms to return system value to users.
The CKB ecosystem, based on RGB++ and Turing-complete programmability, provides a complete DeFi infrastructure. This addresses the previous failures of projects like Omni Layer due to a lack of application scenarios. We now have a complete asset issuance, exchange, and usage system, including staking to obtain RUSD and various application scenarios within the Lightning Network. The realization of this native Bitcoin solution makes me very optimistic about the future of the Stable++ project.
Host: I would like to ask Lee from Stable++, how do you ensure the security of this stablecoin? How does it act as a unifying agent within the Bitcoin ecosystem?
Lee: Stable++ provides a secure and reliable stablecoin solution for the Bitcoin ecosystem, which indeed represents a progress for the entire ecosystem. Our security and uniqueness mainly benefit from the iterative upgrades of CKB technology, especially the RGB++ protocol, which achieves isomorphic binding with Bitcoin assets, allowing us to interact and transfer seamlessly within the Bitcoin ecosystem.
This UTXO-based stablecoin can flow freely across all UTXO-based chains, which is crucial. Our functionality, security guarantees, and decentralization are based on the CKB virtual machine and the improved Cell model, providing efficient Turing-complete capabilities. We can place complex contracts, public keys, and data verification into the Cell model, greatly expanding Bitcoin's programmability.
Stable++ offers diverse functionalities. Users can use BTC or CKB as collateral to borrow the stablecoin RUSD, which can then be used for more operations. We are about to enter the Lightning Network, and RUSD can also be used for staking within the protocol and for exchanges with dollar-pegged assets.
Our design includes a modular liquidation mechanism that runs automatically through smart contracts, ensuring that the liquidation process is efficient and minimizes losses. This mechanism eliminates potential risks faced by protocols and stablecoin providers while maintaining a low collateral ratio without sacrificing stability and security, thereby improving capital efficiency. Of course, achieving this efficient modular liquidation mechanism relies not only on ourselves but also on the strong support of oracle service providers. We are honored to collaborate with Apro to build a secure, stable, and efficient financial service.
Lee: We would like to hear Apro's views on BTCFi. As a solution focused on the Bitcoin ecosystem, Apro has deployments across multiple BTC L2s. How do you view the future development and potential of BTCFi? Are there any noteworthy opportunities you can share?
Sawyer: This is a question I get asked often. As someone fully invested in the Bitcoin ecosystem, Apro Oracle is certainly optimistic about and strongly supports this field.
Looking back at the second half of last year, there was great anticipation for the Bitcoin ecosystem. However, recently, some voices have diminished, and market sentiment has cooled. This is mainly because, aside from EVM-compatible solutions, many technologies have not yet truly landed, and the breakthroughs people are looking forward to have not yet arrived. However, with the launch of the Babylon mainnet and the gradual approach of core technological solutions like the Lightning Network, BitVM, and RGB++, I firmly believe that the potential of the Bitcoin ecosystem is far from being released.
Bitcoin's L2 solutions mainly address two issues: scalability and smart contracts. If these issues are effectively resolved, Web2 application scenarios like e-commerce have the opportunity to introduce Web3, potentially triggering significant changes. For example, during the Double Eleven shopping festival, Alipay needs to handle millions of TPS in transaction volume, while current blockchain solutions can only reach a maximum of several hundred thousand TPS, with high transaction fees. If Bitcoin L2 can achieve breakthroughs in this area, combined with Bitcoin's widely circulated digital currency attributes in Web2, the potential of the Bitcoin ecosystem will be greatly released.
Satoshi Nakamoto once predicted that in 20 years, Bitcoin's transaction volume would either be very large or nonexistent. Now, with less than four years left until this prediction, I believe we will see the former realized.
From another perspective, Bitcoin's current market capitalization exceeds $1 trillion, while Ethereum's recent market capitalization is around $300 billion. The TVL of Ethereum's DeFi ecosystem accounts for 10%-15% of its total market capitalization. If Bitcoin can reach a similar ratio, it would mean there is hundreds of billions of dollars of space to be developed. As the world's safest and most stable cryptocurrency, Bitcoin can provide strong support for DeFi applications, and these projects can fully utilize Bitcoin's characteristics to develop financial applications.
In the development of BTCFi, there are two questions worth considering: how to work hand in hand with Bitcoin maximalists and how to introduce more securities or utility tokens with intrinsic value based on Bitcoin as the sole currency, rather than worthless meme coins. Only by addressing these two questions can the Bitcoin ecosystem nurture richer and more sustainable business models, with the potential to replace Ethereum's dominant position in the DeFi field in the future.
Lee: CKB, as a leader in Bitcoin's second-layer solutions and the UTXO camp, not only brings technological breakthroughs but may also influence the overall layout of BTCFi. Zhou Zhou, how do you view the future development and potential of BTCFi?
Dr. Hongzhou Chen: We can look at the projects that CKB has launched and is about to launch from a holistic perspective. A few days ago, I shared a diagram in the group:
This diagram illustrates how CKB enhances the Bitcoin ecosystem. First, at the top, there is a circle representing the secure infrastructure built on PoW and the programmable UTXO model. Below, there are two intersecting circles: the left one is the Lightning Network, and the right one is decentralized stablecoins. The intersection of these three circles represents the goal we hope to achieve for the Bitcoin ecosystem, which is Web5 (Web2 + Web3).
The first circle corresponds to the RGB++ protocol we proposed earlier this year, which was later upgraded to the RGB++ layer. The left circle represents our Lightning Network plan to be launched next month, including the Fiber Network, projects combined with DPIN, and staking of native Bitcoin and RGB++ assets. The right circle represents a new paradigm for attracting large-scale adoption through stablecoins.
The intersections of these three circles correspond to different concepts. The intersection of the POW/UTXO circle and the stablecoin circle represents the narrow definition of BTCFi, such as IBO platforms, swaps, and other on-chain infrastructure. The combination of the RGB++ Layer and the Lightning Network represents an innovative P2P economic model, which aligns with Satoshi Nakamoto's vision in the Bitcoin white paper of establishing a network for equal and fair economic activities. The combination of the Lightning Network and stablecoins corresponds to PayFi, aimed at promoting blockchain applications in developing countries.
With the launch of Stable++ and the upcoming introduction of the Lightning Network, we have completed this trinity architecture, corresponding to our RGB++ layer strategy, Lightning Network strategy, and large-scale adoption promotion strategy. We have already established various infrastructures within this framework. Regarding the future development of Bitcoin, the vision of Web5, and the development of various ecological projects within this framework, we are in a state where a flywheel is about to start.
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