Bitcoin is the undisputed king of crypto but if you ask many DeFi enthusiasts, they may well tell you that it’s next to useless, despite its enormous value.
That’s because Bitcoin, although considered to be a reliable store of value and an increasingly accepted means of payment, has some serious limitations that preclude its use in other applications.
The problem stems from Bitcoin’s lack of programmability. Its underlying blockchain is built using a less sophisticated scripting language, and so it cannot support the smart contracts that are such an important feature of traditional DeFi blockchains, such as Ethereum and Solana. The lack of smart contracts is the reason why very few decentralized applications, or dApps, are built on the Bitcoin network.
Because there aren’t any Bitcoin dApps, it means BTC holders are unable to put their assets to work in the same way as they can with other cryptocurrencies. If you hold ETH or SOL, you have countless options to use those tokens to generate more wealth, such as staking them to support the network, depositing them into liquidity pools to facilitate transactions on a decentralized exchange, lending them to others through DeFi protocols, or engaging in more sophisticated yield farming activities.
BTC holders cannot engage in any of these activities, which is why Bitcoin is often described as an “idle asset”. When you buy BTC, all you really do is “Hodl” it in your wallet, hoping for the price to increase.
Another challenge that makes Bitcoin difficult to use natively in DeFi dApps is its notoriously slow network. The Bitcoin blockchain can only handle around seven transactions per second, which means very sluggish transaction speeds. That’s a no go in the world of DeFi, where profitability often hinges on being able to trade and transact in real time.
Changing Bitcoin
Given the enormous amount of value locked into Bitcoin — around $1.34 trillion according to CoinMarketCap — it’s clear that there’s a lot of potential to be had by bringing more DeFi utility to Bitcoin. That’s why the Bitcoin developer community has been busy exploring new ways to do that. They have come up with some interesting concepts, including interoperability protocols, Layer-2 solutions and sidechains.
Most readers have probably heard of Bitcoin L2s and sidechains. L2s are protocols built atop of Bitcoin that aim to offload transactions to a second network that’s linked to Bitcoin’s blockchain, in order to increase transaction speeds, lower costs and provide more utility. One of the most prominent examples is the Lightning Network, which uses smart contracts to speed up BTC transactions. It can handle up to one million transactions per second.
As for sidechains, these are standalone blockchains such as Stacks that integrate with Bitcoin by periodically settling their transactions on its network. Not only do they speed up transaction times, but they also introduce smart contracts into the mix, providing a foundation for dApps that can support native BTC.
The most recent innovations in Bitcoin are the interoperability networks, such as Zeus Network, which aim to bring more utility to BTC by integrating it natively with other blockchains.
Zeus is trying to bridge the gap between Bitcoin and Solana, so BTC holders can use their tokens within that chain’s vibrant DeFi ecosystem, which is second only to Ethereum in terms of its total value locked. By bringing BTC into the Solana ecosystem, Zeus also supports rapid and low-cost transactions as it leverages the Solana Virtual Machine or SVM, which is Solana’s counterpart to EVM.
Not another Bitcoin bridge
Zeus is sometimes referred to as a bridge, but that is not really the case. In fact, its developers stress that what they’ve actually built is a “bridgeless communication layer”. It’s decentralized and it sits above Solana and Bitcoin, facilitating the transfer of value between the two chains. It’s innovative use of the SVM enables it to synchronize Bitcoin’s strong foundational security with the incredible scale of Solana, so users can tap Bitcoin’s vast liquidity while transacting in real-time with a huge array of Solana-based DeFi dApps.
The secret sauce in Zeus’ network is the Zeus Program Library, which acts as a kind of intermediary between Bitcoin’s and Solana’s blockchains, where developers can create digital assets including cryptocurrencies and non-fungible tokens or NFTs that can live on both chains. Through this, Bitcoin holders can mint new tokens, pegged 1:1 with the value of real BTC, that live on Solana’s chain. They can use these tokens directly with the numerous DeFi dApps, such as Raydium, Jupiter, Jito and Marinade Finance, as well as games like Star Atlas and NeoPets, that are hosted on the Solana network.
Going further, Zeus also provides a framework for dApp development, and to showcase this it has built its very own cross-chain liquid staking protocol. It’s called APOLLO and it provides an easy way for BTC holders to wrap their tokens and stake them to support the Solana network.
Zeus intends to increase its utility by building on the popularity of Bitcoin’s Ordinals and Runes, and to that end it is building mechanisms that will enable these assets to be used on Solana-based DEXs and NFT marketplaces.
Zeus’ ambitions aren’t just to bring more utility to Bitcoin. By making BTC interoperable with Solana, it hopes to inject billions of dollars’ worth of liquidity into Solana’s ecosystem, and ultimately grow to rival the DeFi ecosystem on Ethereum. If it can do this, it will have significant positive impacts on the value of both BTC and SOL.
Can Zeus win over Bitcoin’s maximalists?
The challenge of unlocking Bitcoin’s liquidity is one that has perplexed developers for years, as the lack of programmability on the Bitcoin network has always thrown a huge spanner in the works. Zeus provides a way to overcome these complexities by abstracting the technicalities of integrating BTC with other chains. But the technical challenge is just one of the problems that Zeus has to overcome.
While Zeus has demonstrated that its infrastructure is up to the job, it remains to be seen if it will succeed in convincing Bitcoin’s users to take advantage of its network. Bitcoin’s users are notoriously fickle, and many hold Bitcoin’s independence and decentralization in high regard. These so-called “Bitcoin maximalists” have proven resistant to change, insisting that Bitcoin alone will emerge as the world’s official currency, without the help of any other networks.