BTCfi infrastructure refers to the underlying systems, protocols, and applications that enable decentralized finance (DeFi) functionalities using Bitcoin. This includes bridges, layer-2 solutions, and various platforms that allow Bitcoin to be utilized in lending, borrowing, and trading activities beyond its native blockchain. It provides the necessary tools for Bitcoin holders to participate in the broader decentralized financial ecosystem. This infrastructure expands Bitcoin’s utility beyond a store of value.
Context
The current state of BTCfi infrastructure is marked by continuous innovation, aiming to unlock Bitcoin’s vast capital within DeFi without compromising its security or decentralization. Key discussions involve the trade-offs between different layer-2 solutions and bridging mechanisms, particularly concerning security risks and transaction costs. A critical future development is the maturation of these solutions, potentially leading to a significant expansion of Bitcoin’s role in decentralized financial markets.
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