DeFi has long eluded Bitcoin. That’s about to change.

Bitcoin is the most widely known digital currency. However, as decentralized finance (DeFi) has revolutionized the financial landscape, its role has been primarily limited to a store of value or collateral asset. The emergence of Bitcoin DeFi apps bodes to change this, but what exactly is a Bitcoin DeFi app, and how does one expand Bitcoin’s utility?

A Bitcoin DeFi app is a decentralized application that leverages Bitcoin’s deep store of liquidity and infrastructure to enable financial services traditionally reserved for central institutions the same way as the existing gamut of DeFi platforms. Such apps enable users to engage in lending, borrowing, staking protocols, trading, and yield farming, using Bitcoin as a native asset without intermediaries, banks, or brokers.

Key Features of a Bitcoin DeFi App

The following features define a Bitcoin application:

Native Bitcoin Integration

• Native Bitcoin Integration—Bitcoin DeFi apps operate by integrating Bitcoin natively through a sovereign, or sufficiently decentralized, tunnel. This gives users access to liquidity without relying on the assets wrapped by a centralized third party. This preserves the integrity of Bitcoin maintaining a decentralized chain without using custodians, or third-party systems.
• Inherited Security—Bitcoin DeFi apps need to maintain the high level of security Bitcoin is known for. To achieve this, they must either integrate directly with Bitcoin’s infrastructure or build atop its existing security framework. By inheriting Bitcoin’s robust and secure protocol mechanisms, Bitcoin DeFi apps ensure trustless operation and protect user assets against compromise.
• Cross-Chain Interoperability—By incorporating support for multiple networks, such as Ethereum, and others, a Bitcoin DeFi app ensures that traders can access a vibrant and diverse ecosystem of assets, and infuses those connected ecosystems with Bitcoin’s liquidity.

Potential Bitcoin DeFi App Use Cases on Hemi

By integrating a fully indexed Bitcoin node within an Ethereum Virtual Machine (EVM), dubbed the Hemi Virtual Machine™ (hVM™), Hemi is the perfect network for a wealth of possibilities for Bitcoin DeFi app developers. A few of these use cases include:

Lending and Borrowing

Bitcoin DeFi apps on Hemi can change the face of lending and borrowing by letting users use Bitcoin as collateral. Borrowers can leverage Bitcoin against stablecoins, or other vetted assets, without selling their underlying Bitcoin. Lenders are exposed to preferable yield rates, backed by Bitcoin’s liquidity, and secured on Hemi. Hemi’s architecture to support trustless setups eliminates the need for intermediaries and expands accessibility to lenders and borrowers, large and small.

Decentralized Trading

Decentralized Exchanges (DEXs) are the cornerstone of DeFi. With its built-in support for Solidity-based platforms, hVM is the perfect place for existing DEXs to port over their infrastructure and find exposure to Bitcoin in a secure, performant environment. Unlike Bitcoin and Ethereum, Hemi’s efficient network facilitates high volumes of transactions at a comparatively fractional cost, fostering growth without exorbitant fees for traders.

Yield Farming and Staking

The same friendliness hVM extends to DEXs and applies to any other solidity-based platform, enabling a wider world of DeFi activities beyond asset swaps. Hemi is integrated with the modular Cygnus layer, allowing developers to engineer staking and restaking mechanisms directly into apps. This opens up the possibility to use Bitcoin beyond a speculative asset, and potentially compound earnings across numerous liquidity protocols.

Cross-chain Portfolio Management

With native Bitcoin support integrated into an EVM, Hemi becomes the perfect foundation for tools that track assets across chains. A unified portfolio on Hemi reduces transaction costs, and meanwhile assures minimal risk, given the network’s robust Proof-of-Proof security protocol. Simplified asset management makes it possible for savvy traders to make the most of opportunities in diversification, arbitration, and capital-efficient yield optimization.

Hemi is the Home for Bitcoin DeFi Apps

Bitcoin DeFi apps stand to redefine the way Bitcoin acts as an asset, providing true utility to the most widely recognized cryptocurrency. By leveraging Hemi’s architecture, developers can unlock a new era of Bitcoin-backed financial opportunities, previously relegated to other networks, paving the way forward to a future where Bitcoin takes its rightful place at the epicenter of the DeFi disruption.