Jack Dorsey to Launch a DeFi Product on Bitcoin on November 19th
Taproot is officially live. Is DeFi on Bitcoin next?
Covered:
- Taproot: Historic Moment
- What Jack Dorsey Is Up To
- Bitcoin On DeFi Possibilities
Taproot: Historic Moment
Taproot, the first major upgrade to Bitcoin since 2017, is now fully activated on the Bitcoin network. This is a historic moment, as changes to the Bitcoin protocol are difficult by design. After the blocksize wars in 2015, changes have since required basically 95% consensus from network participants.
What is Dorsey up to? To tie it together, Taproot was fully activated November 13th, (which improves the script for more smart contract functionality), and in an earnings call last week Dorsey announced that TBD will release their whitepaper on November 19th, and all signs point to it being a DeFi project on Bitcoin. DeFi on Bitcoin, with execution on the base layer could be coming soon, and it appears Dorsey was waiting for Taproot before the whitepaper drops.
First Taproot block found
Height: 709632
Hash: 0000000000000000000687bca986194dc2c1f949318629b44bb54ec0a94d8244A new chapter of #Bitcoin has begun.
— Clark Moody (@clarkmoody) November 14, 2021
Recommended: BITCOIN TAPROOT UPGRADE OFFICIALLY ACTIVATED
As mentioned above, one aspect of Taproot allows for easier programmability and smart contracts on Bitcoin, creating potential for dApps of all sorts to be built on top of it. Bitcoin’s rigid simplicity, script and small blocksize wasn’t really designed for smart contracts and complex transactions, but with the addition of MAST scripts, executable code can be compressed into a single hash, called a “MAST root”. It is still not a panacea for the limits of smart contracts on Bitcoin, though.
However, this enhanced programmability still would make Bitcoin, at the base layer, become more aligned with its peers in the space, like Ethereum, Polkadot, and Avalanche — but according to those familiar with the upgrade, Bitcoin will still be “limited in terms of programmability” — but is an improvement nonetheless.
Bitcoin On DeFi: What Jack Dorsey Is Up To
Many have speculated that Jack Dorsey has been waiting for this upgrade to implement some sort of DeFi protocol on Bitcoin–which is not possible without smart contracts of course. Jack has already laid the groundwork for some sort of Bitcoin project, with his forthcoming division of Square called TBD, at least that is the general consensus.
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Jack Dorsey is a maximalist, plain and simple, so it’s hard to imagine he would want to scale to a second layer and use a gas token for the contract execution, or even utilize Stacks, which is the pre-eminent smart contract Layer 1 that leverages Bitcoin and runs smart contracts, technically, on Bitcoin.
Also, Dorsey wouldn’t be able to use the Liquid sidechain, because it doesn’t have smart contract functionality. Federated sidechains also present their own set of problems, mainly centralization and security risks.
Bitcoin On DeFi Possibilities
In light of all that, it appears Jack will want to use strictly Bitcoin, not wrapped Bitcoin, or any derivative. Is that even possible, even with this upgrade, that is TBD. Maybe Square’s new platform TBD stands for ‘True Bitcoin DeFi’. It is clear the project is focused on Bitcoin and DeFi. When it was announced in July, Dorsey said TBD will be “focused on building an open developer platform with the sole goal of making it easy to create non-custodial, permissionless, and decentralized financial services.”
The project is in addition to the Bitcoin hardware wallet Dorsey is developing. In a tweet in late August, Dorsey hinted at what TBD will be all about–apparently a decentralized exchange for Bitcoin.
We’ve determined @TDB54566975’s direction: help us build an open platform to create a decentralized exchange for #Bitcoin https://t.co/jHYWHy1qmu
— jack (@jack) August 27, 2021
The lead of the project at Square Mike Brock said: “This is the problem we’re going to solve: make it easy to fund a non-custodial wallet anywhere in the world through a platform to build on- and off-ramps into Bitcoin. You can think about this as a decentralize exchange for fiat.” With taproot, smart contracts will be possible on Bitcoin, but not “fully expressive”, like on other Layer 1’s. There is a debate as to just what is possible in terms of smart contracts. What we do know is on November 19th DeFi on Bitcoin is coming.
The post Jack Dorsey to Launch a DeFi Product on Bitcoin on November 19th appeared first on CryptosRus.
Text source: CryptosRus
