BounceBit is a restaking protocol that allows Bitcoin holders to earn yield by delegating their tokens on the platform. To provide Bitcoin owners with a means of earning income on idle BTC tokens, BounceBit was developed. It is a Proof of Stake layer 1 protocol that aims to increase Bitcoin on-chain activities through active engagement by allowing validators to stake both BTC and BB (the protocol’s native currency). In contrast to conventional staking methods, which entail users locking their coins to validate transactions and receive rewards, restaking entails "wrapping" BTC into another token usable within decentralized finance (DeFi) applications. This approach creates fresh opportunities for generating yield from dormant BTC holdings, a task historically challenging due to Bitcoin's Proof-of-Work (PoW) consensus mechanism.

Users stake their assets on BounceBit protocol;the assets are restaked and used to provide security for other protocols (Shared Security Clients, SSCs).

How BounceBit Works

BounceBit explores native Bitcoin's security, liquidity, and low volatility with its dual-token structure. With money in the controlled custody of Mainnet Digital and Ceffu, the protocol communicates with Bitcoin at the asset level instead of the protocol level.

For holders of Bitcoin, the protocol presents special prospects by combining the DeFi and CeFi yield mechanisms. Through financing rate arbitrage, users may lock idle Bitcoin using the CeFi framework to earn yield. Then, to improve the functionality of the token and enable users to partake in staking, restaking, and other on-chain activities, BounceBit transforms the Bitcoin into wrapped versions like bounceBTC. For instance, users can provide validators their bounceBTC in return for stBTC, a liquid staking derivative that can be restaked to gain more rewards. If not, they can engage in DeFi activities like yield farming, leverage trading, and AMMs or directly stake BTC to shared security clients (SSCs) like sidechains, bridges, and oracles.

Raise

Bouncebit recently announced a $6 million fundraising round led by Blockchain Capital and Breyer Capital. Along with angel investors like Nathan from Anchorage Digital, Calvin and Jessy from Eigenlayer, Kevin and Ashwin from Brevan Howard, and others, additional participating investors include dao5, CMS Holdings, Bankless Ventures, and OKX Ventures.

Benefits of BounceBit

1. Expand BTC liquidity: BounceBit has the potential to expand the liquidity of wrapped BTC by enabling DeFi apps. This might lead to a rise in the value of the most popular cryptocurrency globally.

2. Improve the developer experience: The business is developing a line of Shared-Security Clients ("SSCs") that serve as a framework for developing different types of restaking solutions. This may make the development process easier for initiatives that want to use Bitcoin in the DeFi environment.

3. Develop the DeFi ecosystem: BounceBit may help the DeFi ecosystem flourish and gain traction by making it easier for wrapped Bitcoin to be used in DeFi apps.

Challenges of BounceBit

1. Although the idea is gaining popularity, restaking is still a relatively new strategy with changing legal environments.

2. Technical complexity: it takes a great deal of technical know-how and continuous development to build and maintain a secure and dependable relay system.

3. Competition: BounceBit has competition in the nascent field of Bitcoin restaking, and to gain market share, it will need to properly set itself apart.

Road to Mainnet

Currently, BounceBit is running the Water Margin Event that offers early access for users to interact with the platform and accumulate points and rewards. Users can experience staking with the different providers of yield strategies with BTCB and/or USDT. With the Mainnet launch set for April and interest around BounceBit continuing to grow, now is a great time to start earning points!