Zest Protocol Co-founder: Enhancing Programming Could Boost BTC’s DeFi Ecosystem Over ETH’s
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Tycho Onnasch, co-founder of Zest Protocol, asserts that adding new programming capabilities to Bitcoin could enable it to surpass Ethereum’s current dominance in the decentralized finance (DeFi) space.
Onnasch suggests that the Bitcoin DeFi ecosystem has the potential to rival, if not exceed, Ethereum’s once more users begin to adopt and trust Bitcoin Layer 2 solutions.
Enhancing Bitcoin’s DeFi Ecosystem
Tycho Onnasch, co-founder of Zest Protocol, highlights that while Bitcoin Layer 2 (L2) solutions show promise, they inherit security vulnerabilities from Layer 1 (L1). Users need to understand how these L2s handle BTC deposits and withdrawals before trusting them. Onnasch emphasizes the need to bolster Bitcoin’s role as a store of value by integrating financial activities on its network, which is essential for BTC’s evolution into a global reserve asset.
Onnasch believes Bitcoin requires a native, decentralized DeFi infrastructure for true functionality as a store of value. He argues that without the ability to buy, sell, borrow, lend, or collateralize BTC, it cannot fulfill its role effectively. He foresees the Bitcoin DeFi ecosystem surpassing Ethereum’s due to BTC’s superior asset qualities, driving a natural shift toward Bitcoin-based decentralized finance. For this to happen, Bitcoin L2s must be secure and trusted.
Security and Compatibility in Bitcoin Layer 2 Solutions
Onnasch notes the importance of EVM compatibility for DeFi, citing Clarity, the Stacks L2 programming language, as a secure option for developing EVM applications. He explains that around $1 billion in staked STX ensures the security of BTC transactions between L1 and Stacks L2, offering a robust security budget.
Different Bitcoin L2s employ various bridging techniques, with Stacks using a BTC threshold signature method for cost-effective security. Onnasch advises consumers to thoroughly understand an L2’s BTC handling processes before investing significantly to ensure safety.
