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I swear, I seriously feel like I've already gone insane and I can't even trust my senses at this point. I've been chewing through website after website listed as "defi", repeatedly finding the exact same thing:

Bitcoin is not supported, and they all want me to "connect my wallet" inside the browser.

What's with this? Why do they support 927 different garbagecoins I've never heard of (outside of these websites) but never Bitcoin (BTC)?

I honestly believe that all of those websites are made by the same entity, and that they are all some kind of elaborate scam. But what I can't figure out is why none of them even support Bitcoin -- the only real crypto currency.

What am I missing?

Michael Folkson
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G Gelfman
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4 Answers4

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Bitcoin is pushing most use cases and applications to second layers (e.g Lightning, sidechains) because blockchains don't scale. Most "DeFi" apps use the blockchain for transactions, filling up blocks and raising onchain transaction fees. Development is easier if you assume blockchains scale and can stay decentralized as they scale (which they can't).

It is true that Ethereum's Solidity is more expressive than Bitcoin Script (allows for infinite loops etc) but you can still do a lot with Bitcoin Script. Ethereum has found a niche of making it very easy to issue tokens and selling them at vast prices. It is much harder to support an infinite number of tokens moving over say Lightning where channels are primarily denominated in Bitcoin.

There are some projects buildings "DeFi" like applications on Lightning e.g. discreet log contracts (DLCs) but it takes a lot longer to build if you actually want to keep it decentralized rather than merely labelling it "Decentralized" (De).

Michael Folkson
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  • This is a very roundabout way of saying Bitcoin does not support DeFi by design (which is fine, it doesn't have to). – Mahn Mar 14 '21 at 23:42
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    I don't think you've read my answer. DLCs would be deemed actual "DeFi" ie decentralized finance rather than fake DeFi (centralized or unscalable). You don't need infinite loops to write "smart contracts". – Michael Folkson Mar 14 '21 at 23:59
  • That's not what OP asked though. Sure, some sort of smart contract ability exists, but what the OP refers to as "DeFi", as defined by turing-complete tokens built atop of the Ethereum blockchain, is not supported by Bitcoin. – Mahn Mar 15 '21 at 00:03
  • A specific example of a financial contract you can write in Ethereum (that you need Turing completeness for) that you can't with Bitcoin? I think you just deal in platitudes and buzzwords. – Michael Folkson Mar 15 '21 at 00:05
  • Atomic token swaps? Pegged stable coins? This isn't platitudes, it's the reality, Bitcoin does not cover all use cases that exist today in cryptocurrency. – Mahn Mar 15 '21 at 00:10
  • Atomic swaps: https://bitcoin.stackexchange.com/a/103469/ Synthetic Dollar:https://twitter.com/Chris_Stewart_5/status/1341772557230456832 OmniBOLT: https://youtu.be/G-T_uwqzDAI –  Mar 15 '21 at 04:56
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Why does every “defi” thing only support garbagecoins and never Bitcoin?

DeFi - Decentralized Finance

Financial applications using decentralized protocols. Such projects exist which support BTC and use Bitcoin tech. Infact they exist since years. Example: Bisq DAO and DEX, Joinmarket etc.

What's with this? Why do they support 927 different garbagecoins I've never heard of (outside of these websites) but never Bitcoin (BTC)?

Because you must be looking at altcoin projects.

What am I missing?

Few examples of DEX Protocols involving Bitcoin projects:

  1. Bisq (On-chain)

  2. TDEX (Liquid sidechain)

  3. Sovryn (Rootstock sidechain)

  4. OpenDEX (Lightning Network)

DLC mentioned by Michael Folkson can be used if you need oracles in Bitcoin smart contracts or projects. Also such things scale better using layer 2. Defi does not mean solidity code or centralized projects promoted by influencers, altcoin foundations etc.

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Vitalik originally wanted to create the smart contract language on bitcoin, but decided to start from scratch due to the limitations on scripting at that time. lightningnetwork Rootstock and Polkadot are projects which attempt to port much of the smartcontract defi code too btc as a layer two

basicbooch
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Bitcoin does not support the kind of turing-complete "smart contracts" (decentralized code) that DeFi projects typically require to function, hence these kind of projects are usually built on top of the Ethereum blockchain (which does support it) or other Ethereum-like projects.

Mahn
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