When it comes to the world of cryptocurrencies, it’s common knowledge that Bitcoin is king. Having held the #1 spot for the most valuable cryptocurrency since its inception, Bitcoin is by and large where the most money in all of crypto is kept. In fact, if you were to go by the current market cap alone, you would find that as of August 2022, Bitcoin accounts for 42% of all crypto assets across the entire industry, making up around $450 billion dollars of value.
Part of the reason Bitcoin retains such strong value is because of the unique circumstances that surround it. The first important thing to know about Bitcoin is that it’s completely decentralized. There is no government or financial institution that controls it. This means that no one can manipulate the supply or value of Bitcoin, making it an attractive investment to anyone, not just wealthy people who want ownership of a company.
Another thing that makes Bitcoin an attractive investment in the crypto space is the fact that it was the very first major cryptocurrency. This means that it has a first-mover advantage and a large, established user base. Many people know about Bitcoin even if they don't know any other cryptocurrencies, which gives it a level of mainstream awareness that other coins don’t have.
Similarly, one last thing that may give Bitcoin an edge against other cryptocurrencies is its network effects. Like most things, that which is popular tends to become more popular. It's no different in the world of cryptocurrencies, meaning that Bitcoin being popular makes it more likely for people to want to invest in it, making it even more popular and creating a positive feedback loop.
Why Integrate Bitcoin?
Given Bitcoin’s immense value held, projects that can tap into the value of Bitcoin have a strong foundation to build on. InfinitySwap will be integrating Bitcoin for this exact purpose. When a project starts from zero, it has no way of attracting investors and capital other than hoping new money will flow in through its incentives, marketing campaigns, and more. However, if a project can integrate Bitcoin, it immediately gains access to the $450 billion market cap locked in Bitcoin, bringing in a whole new wealth of investors and capital to the project.
Many decentralized finance, defi for short, protocols struggle to bring in even $100 million in total value on the platform. However, getting even a small 0.1% of the Bitcoin involved on your platform would bring in $450 million at current prices, which would be an order of magnitude more than what most defi protocols have. This is why it is important to tap into the Bitcoin investor base, as it can bring in enough capital to move the project forward. That being said, how exactly will InfinitySwap bring investment from Bitcoin holders and supercharge their Bitcoin?
Liquidity Providing Makes Bitcoin Earn Interest
Unlike many other cryptocurrencies, Bitcoin cannot earn interest. Its sister coin, Ethereum, can earn interest in many ways; the primary way is to stake the coin. This means using your Ethereum to secure the network. Bitcoin is not secured in the same way, so it's not possible to stake it. However, there are still ways to earn interest on Bitcoin using InfinitySwap. This is done by providing liquidity.
Providing liquidity means adding funds to the pool that other traders will use to swap between Bitcoin and another asset, such as USDC (US Dollar-pegged stablecoin) or Ethereum. Traders will pay you in swap fees for providing this liquidity as they pay a small percentage every time they swap between the two assets. This allows you to earn interest on Bitcoin without having to do anything but provide it to InfinitySwap along with an equal dollar value of another asset (like USDC or ETH) as well.
Liquidity providing can also earn you even more income, as InfinitySwap may provide token rewards in addition to swap fees. This is to increase the number of holders of the InfinitySwap token, so you may find that you want to hold some InfinitySwap tokens as well once they are rewarded to you.
On the other hand, you may choose to sell them for a profit as soon as you receive them and compound your earnings back into Bitcoin that way. While both methods are possible, it's up to you to decide what you want to do with your earnings should InfinitySwap reward them to you.
InfinitySwap Will Let You Swap Bitcoin Without Bridging It
In the space of decentralized finance, there are many blockchains to use, but unfortunately, funds from one are not directly tradeable on another. This means that you will need to use bridges to move, say, USDC from Ethereum to Avalanche. While this approach works fine, and bridges have done billions of dollars of volume over the last year, they are notoriously insecure. Just recently, in the last few months, the Harmony bridge was hacked for $100 million, and the Nomad bridge was hacked for $200 million.
Because of this, many users simply do not trust bridges. While this is safer, it also severely limits the liquidity of the system and the number of opportunities available. What if there were a way to both access the defi ecosystem but not be vulnerable to bridge hacks?
This is exactly what InfinitySwap can do for you. The Internet Computer will be directly integrating the Bitcoin network within it, meaning that you will be able to move BTC into InfinitySwap and trade it with other assets on the ecosystem without needing to expose yourself to bridges that may get hacked in the future. This means you can provide liquidity on the platform and earn interest without taking on additional risk.
While bridges are indeed core defi infrastructure, they are also a vector of risk. This is why even though you may need to use them for purposes related to decentralized finance and investing, it is important to be aware of the risks associated with using a bridge and try to avoid them completely if at all possible.
InfinitySwap May Potentially Expand Into Lending
Lending also plays an incredibly important part in decentralized finance. Lending and borrowing platforms, also called Money Markets, allow users to borrow money from a decentralized financial institution, in this case, potentially InfinitySwap. Then, they can use this borrowed money to buy more assets or to purchase something in the real world.
For this, they pay interest depending on how long they borrow the money and how much they borrowed. The lenders are the ones that receive this interest payment as long as they have funds deposited on the platform. This means lenders can deposit their idle funds and get a steady return on them while also providing liquidity to the market.
In the future, should InfinitySwap expand into the lending and borrowing market, you will additionally be able to earn interest on your Bitcoin and perhaps even Ethereum or ICP holdings by lending them out to other members and users of the InfinitySwap platform.
This is an even safer yield than providing liquidity because there is no chance of suffering impermanent loss. However, this also means the earnings potential is lower as well to account for the reduced risk. Still, this could be a lucrative opportunity for those who are comfortable with the lower income or prefer a lower risk.
This will also allow for Bitcoin depositors to not only earn interest but borrow as well. Using borrowed funds, they may choose to leverage into more Bitcoin, buy ICP, InfinitySwap tokens, other crypto assets, or even spend that money in the real world on various goods.
InfinitySwap is looking to integrate Bitcoin so that both Bitcoin holders can find new ways to use their holdings and InfinitySwap users can benefit from their business. Once InfinitySwap goes live, users can deposit Bitcoin into their account and then trade with other users on the platform for a variety of different cryptocurrencies and tokens.
Additionally, they can provide liquidity to the markets for these assets and make money off of the swap fees paid by traders and rewards potentially provided by InfinitySwap. Bitcoin holders won't have to sell their assets to earn interest, InfinitySwap gains greater value and liquidity from their support, and everyone wins. The integration of Bitcoin into InfinitySwap will help supercharge the holdings of Bitcoin users and bring more value to their already incredible assets.
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*Disclaimer: While every effort is made on this website to provide accurate information, any opinions expressed or information disseminated do not necessarily reflect the views of InfinitySwap itself.