Bitflow saw an opportunity to build a decentralized exchange on Bitcoin. However, Bitcoin’s design made building a DEX difficult.
So, they turned to Bitcoin Layers, specifically the
Stacks Bitcoin Layer 2, along with its upcoming
sBTC release, to realize their vision.
Stacks and sBTC unlock Bitcoin's full potential for DeFi by making trust-minimized smart contracts possible on Bitcoin. With these new capabilities, Bitflow can build a decentralized exchange on Bitcoin.
While building DeFi on Bitcoin is technically possible without sBTC, it is not ideal. Current solutions, like
Wrapped Bitcoin, rely on a trusted federation of custodians to bridge or peg into a tokenized Bitcoin.
sBTC differentiates itself as the first genuinely decentralized, non-custodial Bitcoin asset.
In combination with Stacks, sBTC will introduce a trustless two-way peg between Bitcoin and a tokenized Bitcoin. This allows for the seamless movement of 1:1 Bitcoin-backed assets in and out of smart contracts while ensuring trustless writes to Bitcoin’s base layer.
While most two-way Bitcoin pegs are trusted, sBTC creates an open membership, dynamically changing, decentralized signer set.
sBTC leverages Stacks’
Nakamoto Release for improved transaction security and speed — sBTC inherits 100% of Bitcoin’s security budget and increases transaction time from 10 minutes to roughly 5 seconds.
So, sBTC solves the 3 major downsides of building a DEX on Bitcoin.- Smart Contract Functionality. sBTC solves the Bitcoin write problem: smart contracts can programmatically send sBTC to a BTC address. This allows smart contracts outside of BTC to effectively write to Bitcoin.
- Fast Confirmation Times. sBTC will enable fast block confirmation, with transactions mined and confirmed within seconds instead of minutes. This upgrade will make a truly decentralized DEX on Bitcoin finally possible.
- Low Transaction Fees. sBTC and Nakamoto will increase the efficiency and throughput of transactions on Stacks and ultimately on Bitcoin.
With sBTC, Bitflow is able to unlock Bitcoin’s full potential with a decentralized exchange on Bitcoin.