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These are intriguing times for Bitcoin and all other cryptocurrencies. Looking beyond the price momentum, one cannot ignore the dwindling Bitcoin Dominance due to other networks building momentum. However, decentralized finance (DeFi) on Bitcoin is growing, indicating a momentum shift might be nigh. DeFi leverages blockchain technology to give users access to financial services without having to rely on intermediaries.
Bitcoin Dominance Keeps Dipping
There are numerous intriguing cryptocurrency metrics to gauge industry health. While no one denies Bitcoin is the biggest cryptocurrency by market cap, its dominance has declined. In fact, it has been well below 50% for several months and shows no sign of moving up again. Current market conditions are not helping with this matter, although it has helped create small momentum for the Bitcoin Dominance metric.
Although this metric doesn't tell the whole story, it confirms Bitcoin has started lagging behind the Solanas, Cardanos, and Fantoms of the world. All these alternative networks provide access to decentralized finance (DeFi) opportunities. However, Bitcoin has not had such opportunities for years and is only now making inroads into DeFi. Additionally, one cannot overlook Ethereum, which remains the dominant blockchain for smart contracts and DeFi activities.
Bitcoin has no support for smart contract functionality by default. More specifically, the core network does not support it, but networks tied to Bitcoin - like Rootstock (RSK) and Stacks - have brought smart contract functionality to Bitcoin. Rootstock is a Bitcoin sidechain that acts as a smart contract network to enable decentralized applications, near instant payments, and higher-scalability while retaining the security of Bitcoin.
That is also why DeFi on Bitcoin has become a thing, as these smart contracts remove the need for centralized entities to control user funds.
DeFi On Bitcoin Is Gathering Momentum
As the growth of DeFi on Bitcoin continues unabated, the landscape becomes much more competitive. Whether through Layer-2 and Layer-3 solutions like Portal or native projects like DeFiChain, there is no shortage of options. Portal is a new, self-hosted Layer 2 wallet and DEX on the Bitcoin network. It is building DeFi on top of Bitcoin blockchain to offer a wide range of DeFi services like asset issuance, swaps, staking, and more while maintaining anonymity within open, transparent markets.
DeFiChain, on the other hand, is a hard fork of the Bitcoin blockchain that gives users access to DeFi services while retaining Bitcoin's security and provenance. It enables the implementation of more advanced DeFi applications through custom transactions.
As momentum builds for Bitcoin in decentralized finance, exciting opportunities are on the horizon. However, this effort will only succeed if the DeFi platforms incorporating bitcoin -either the network or the currency - are secure and durable. DeFiChain, a community-driven DeFi venture - will likely continue to dominate in this regard by leveraging the security of the Bitcoin network.
DeFiChain goes one step further than other solutions by providing dAssets on Bitcoin. Decentralized Assets such as dTSLA are nothing else than cryptocurrencies and can be minted by anyone on the DeFiChain blockchain. They give you price exposure, not ownership, of the actual assets such as stocks without leaving the DeFi ecosystem. Since the price of dTokens is determined by supply and demand, it may not fully mimic the underlying stock’s price. But DeFiChain recently rolled out the Fort Canning Road hard fork to ensure that the dToken prices remain within the +/-5% range.
A Bright Future Awaits
Whether one wants to leverage Rootstock, Stacks, DeFiChain, Portal or other solutions, there is a bright future ahead for DeFi on Bitcoin. Developers can build a growing range of applications, products, and services. Bitcoin remains the top cryptocurrency and is the go-to investment option for individuals and institutional investors.
As DeFi on Bitcoin continues to grow and become more diverse, long-term BTC holders can tap into passive revenue streams and put their money to work. More importantly, they will do so while benefiting from the most secure blockchain in the world.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.