BTCFi stablecoin project BitSmiley secures $10 million in funding to accelerate the launch of bitUSD

Recently, a BTCFi stablecoin project named BitSmiley has secured a new round of financing amounting to $10 million, aiming to accelerate the vision of issuing the stablecoin bitUSD on the Bitcoin network. What exactly does this project, affectionately referred to as "Smiley Face," intend to do? What is its core technical framework? Why is the BTCFi market receiving such widespread attention? Let’s delve deeper into this.

The BitSmiley project draws on the successful experience of the Ethereum DeFi ecosystem, combining core concepts similar to MakerDAO and Compound, and introduces three main components:

1. bitUSD: This is an over-collateralized stablecoin protocol, similar to DAI. Users can deposit Bitcoin into the BitSmiley Treasury to mint bitUSD. The protocol uses the bitRC20 standard, ensuring high transparency, and collaborates with a certain cross-chain project to achieve native cross-chain, ensuring circulation in a full-chain environment.

2. bitLending: This is a native trustless lending protocol. It uses peer-to-peer atomic swap technology to facilitate transaction matching and introduces an insurance system to optimize the liquidation process issues present in traditional lending.

3. Credit Default Swap (CDS): This is an innovative derivative agreement. It integrates the functionality of NFT slicing CDS and employs an aggregated bidding method to enhance the efficiency and fairness of the CDS market.

From a technical perspective, the BitSmiley project has two core technical points worth noting:

First, it collaborates with a certain cross-chain project to achieve native cross-chain functionality. This cross-chain project is a POS blockchain based on the Cosmos SDK and Tendermint PBFT consensus engine, capable of providing interoperability in a full-chain environment. Since Bitcoin does not have smart contract functionality, the project can deploy light nodes and perform multi-signature operations based on ECDSA signature algorithms, allowing for secure cross-chain transactions by effectively tracking and managing the UTXO on Bitcoin.

Secondly, BitSmiley adopts the bitRC20 standard, which is similar to the BRC20 inscription standard. When users need to over-collateralize BTC, they can first bridge assets through the official channel. After confirming the user's collateralized assets and conducting consensus verification, BitSmiley's layer2 chain will send a mint instruction for bitUSD to the Bitcoin mainnet. Unlike the traditional BRC20 inscriptions that require a preset total amount for deployment, the bitRC20 standard introduces Mint and Burn operations specifically for stablecoin scenarios to meet the demand for dynamic supply adjustments.

Currently, mainstream capital is flocking into the BTCFi market, and DeFi infrastructure providers like BitSmiley are also actively positioning themselves. There are mainly two reasons for this:

On one hand, the BTCFi market has a huge asset increment space. Currently, the total locked value of the BTC network is approximately 1.6 billion USD, accounting for only 0.14% of the total market value of BTC. Compared to the asset locking rates of networks like Ethereum and Solana, BTCFi still has a growth potential of 50-100 times. Furthermore, its funding sources are not limited to on-chain but also include a significant amount of off-chain demand behind BTC and ETH ETFs.

On the other hand, after mastering the strategic position of stablecoins, lending, derivatives, and other practical applications of core BTC assets, their application scenarios will radiate throughout the entire chain environment, which is expected to have a significant impact on the DeFi model and users of the entire chain environment, driving innovation and development.