Bitcoin is traditionally known for its superiority as a secure digital store of value. However, one of the major drawbacks is its lack of native support for smart contracts and DeFi functionalities. To support Bitcoin’s DeFi functions and smart contract capabilities, many innovations have emerged to boost its transaction speed, scalability, and flexibility in DeFi applications, notably SegWit and Taproot upgrades. Consequently, Bitcoin has found its way into the vibrant world of decentralized finance, unlocking new possibilities for users and investors.

In this article, we will explore the top Bitcoin DeFi projects, their challenges, prospects, and how you can get started with using these platforms.

WBTC Network

Source: WBTC Network

In the early days of cryptocurrency, Ethereum dominated the smart contract scene and Bitcoin holders couldn’t participate in the smart contract era with their bitcoin tokens. Wrapped Bitcoin (WBTC) was the solution that brought Bitcoin to the Ethereum blockchain. After the availability of the WBTC option, bitcoin holders can utilize other chains’ functionalities without having to sell their bitcoin assets.

Wrapped Bitcoin (WBTC) is a groundbreaking ERC-20 token representing a 1:1 peg to Bitcoin. This means that for every WBTC token in existence, an equivalent amount of bitcoin is held in reserve by a trust called BitGo Trust. To achieve a higher degree of transparency, the number of WBTC held in the trust should be made public. WBTC is designed to combine the strength of Bitcoin with the flexibility of an ERC-20 token, offering key features like 100% verifiability, a community-led approach, transparency, and compatibility with ERC-20.

UniSat

Source: UniSat

UniSat Wallet is an open-source Chrome extension designed for managing Bitcoin Ordinals (NFTs) and BRC-20 tokens. The platform facilitates the storage, transfer, and inscription of Ordinals NFTs and provides a user-friendly interface for interacting with collectibles on the Bitcoin blockchain.

Ordinal NFTs are non-fungible tokens that are inscribed on the Bitcoin blockchain using Ordinal Protocol. On the other hand, BRC-20 tokens are fungible tokens that are compatible with the Bitcoin network. With UniSat Wallet, you can see unconfirmed NFTs immediately, inscribe NFTs without running a full node, and store, mint, and transfer BRC-20 tokens. UniSat Wallet is also the official wallet for Ordinal Protocol, serving as a primary point of entry to the Ordinal technology.

One of UniSat’s standout features is its real-time NFT updates. This enables users to see unconfirmed NFTs immediately, allowing seamless access to the tokens. The platform is 100% open-source, with its code available on GitHub. This increases the platform’s trustworthiness and security because anyone can inspect the codes and identify possible irregularities.

LNSwap

Source: LNSwap

LNSwap is a decentralized swap protocol designed to offer users a rapid and private method for exchanging Bitcoin for Stacks (STX) assets and vice versa. This innovative protocol supports all on-chain and Lightning Bitcoin wallets, emphasizing a commitment to user experience and privacy. By leveraging Lightning Network technology, the protocol provides a level of privacy assurance that distinguishes it from other alternatives in the market. You need a Stacks-compatible wallet like Hiro (Leather) Wallet or Xverse Wallet to use LNSwap, you can deposit native BTC and swap to STX through LNSwap.

LNSwap’s mission is to give users direct control over their funds and increase privacy. Users can go from Bitcoin on Lightning Network to Stacks in a few clicks and no KYC on LNSwap, making the platform very user friendly. In addition, anyone can provide liquidity and add funds to join the LNSwap aggregator and earn ~3% fees on each swap completed by users.