Jun 20, 2022
Bitcoin can “rescue” DeFi
Due to DeFi's recent fragility, MicroStrategy CEO Michael Saylor took a rather unexpected stance as he felt that Bitcoin could "rescue" the sector.
Due to the heavy impact of the LUNA-UST crisis at the beginning of May 2022 combined with Ethereum's series of negative events at the beginning of the week related to the stETH "chain effect" of Lido, Alameda and Celsius and thousands of dollars. With a series of serious crashes of the DeFi space, it is safe to say that DeFi is going through the most difficult time in history.
According to Ignite's Aliasgar Merchant, DeFi is "struggling" to weather the crypto winter. He highlighted recent events on Terra and Celius as proof that DeFi, which is seen as the core of Web3, is failing. According to Merchant, the two most important aspects of developing a solid DeFi system are interoperability and scalability.
And so in a recent post, CEO Michael Saylor suggested that Bitcoin and the Lightning Network could become the key to stabilizing this situation. According to him, Bitcoin will provide a fully qualified ethical, economic and technically sound platform for DeFi.
Additionally, he said the Lightning Network and BTC will be used to build the next generation of DeFi. Michael Saylor has been so enthusiastic about Lightning Network, Bitcoin's layer 2 scaling solution, even taking the opportunity to reaffirm that Bitcoin is the future of money and that the Lightning Network will support that capability. expand transactions to the world.
“If you're going to make payments and transactions at high speed, you're going to need a base layer of support that's ethically sound, economically sound, and technically sound. That's what Bitcoin is. Then billions and billions of transactions will take place on layer 2 like the Lightning Network.”
In general, however, DeFi applications on the Bitcoin network have not achieved the same popularity so far on other blockchains such as Ethereum. However, some analysts and researchers believe that DeFi can be sustainably implemented on the Lightning Network, arguing stablecoins and fully collateralized loans against BTC are beneficial.