On August 22, CKB Chinese (@CKB_CN) held a Space on the topic of "The Stablecoin Ecosystem and Future Prospects 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 the CKB Eco Fund.
The Space lasted over an hour, and for those who haven't had the chance to listen, you can catch the audio replay when you have time: *https://x.com/CKB_CN/status/1826603879049691361*
Here are some key points shared by the guests based on the audio replay:
Host: Oracles are an important part of the blockchain ecosystem, capable of obtaining and verifying external information, transmitting it to smart contracts on the blockchain, and 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 of applications in DeFi, GameFi, and more. The role of oracles becomes increasingly important, not only in obtaining and verifying external information but also in 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, participating by staking BTC. Future upgrades will be based on Babylon 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. Sawyer, could you further introduce the specific services and guarantees that Apro provides for Stable++?
Sawyer: The main service Apro Oracle provides for Stable++ is Price Feed. Specifically, it offers real-time, accurate CKB and BTC price data to ensure that the algorithm responds promptly, allowing Stable++ to adjust and make decisions based on the latest data during market fluctuations, maintaining stability. We aim to provide comprehensive support for Stable++, helping it maintain stable and effective operations in a complex market environment.
Lee: Apro is also a strategic partner of CKB. Zhou Zhou, what does CKB value most when selecting strategic partners?
Dr. Hongzhou Chen: When choosing partners, the CKB Eco Fund mainly considers 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 Bitcoin's native security 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, handling 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 within the Bitcoin ecosystem rather than simply replicating the Ethereum model.
- Cognitive vision aspect: We consider whether both parties' long-term visions align when selecting partners. 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, referencing the Star Wars title. Now is the time to launch a counterattack against the EVM model. We also need partners like Apro to participate together. We aim not only to realize the existing functionalities of Ethereum but also to innovate solutions to its centralization issues. The Bitcoin ecosystem offers a new implementation path, such as support from the Lightning Network, which will help revive 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 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. Nature, what are your thoughts on this market response? How do you assess the Bitcoin stablecoin ecosystem 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. I have very high expectations. Stablecoins play a positive role in reducing volatility in the cryptocurrency market and promoting widespread adoption, providing more options for individuals and institutions, so stablecoins are an unavoidable topic across various public chains and technical solutions.
One future vision I have for Bitcoin ecosystem stablecoins is that they can be purchased smoothly without entry barriers, circulate freely on the UTXO application chain, and utilize the RGB++ solution to form a perfect closed loop between BTC and CKB.
Host: What are the Apro team's views on the current stablecoin ecosystem and its future development? How does Apro plan to further support and innovate within 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 within 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 dollar or gold in real society, stablecoins are the foundation for the operation of the financial system.
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 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 within 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 return system value to users through governance tokens and distribution mechanisms.
The CKB ecosystem, based on RGB++ and Turing-complete programmability, provides a complete DeFi infrastructure. This addresses the issues faced by previous 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 in 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 transmit 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, and then use RUSD 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 operates automatically through smart contracts, ensuring an efficient liquidation process while minimizing losses. This mechanism eliminates potential risks faced by protocols and stablecoin providers while maintaining a low collateral ratio without sacrificing stability and security, thus 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 safe, 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 and strongly supports this field.
Looking back at the second half of last year, everyone was full of expectations for the Bitcoin ecosystem. However, recently, some voices have weakened, and market sentiment has cooled. This is mainly because, aside from EVM-compatible solutions, many technologies have yet to be truly implemented, 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 technologies like the Lightning Network, BitVM, and RGB++ to mainnet launch or practical applications, I firmly believe that the potential of the Bitcoin ecosystem is far from being released.
Bitcoin's L2 solutions primarily 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 tens of thousands of TPS at most, and transaction fees are expensive. If Bitcoin L2 can achieve breakthroughs in this regard, 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, there are less than four years left until this prediction, and I believe that in four years, we will see the former realized.
From another perspective, Bitcoin's current market capitalization exceeds $1 trillion, while Ethereum's recent market capitalization is about $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 that 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 leverage Bitcoin's characteristics to develop financial applications.
In the development of BTCFi, there are two questions worth pondering: 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 meme coins lacking actual value. Only by addressing these two issues 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 Layer 2 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, with the left representing the Lightning Network and the right representing decentralized stablecoins. The intersection of these three circles represents the goal we hope the Bitcoin ecosystem will achieve, which is Web5 (Web2 + Web3).
The first circle corresponds to the RGB++ protocol we proposed earlier this year, which later upgraded to the RGB++ layer. The left circle represents our Lightning Network plan launching 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 RGB++ Layer and the Lightning Network represents an innovative P2P economic model, aligning 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 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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