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The Bitcoin (BTC) blockchain started as a network devoid of smart contract functionality, but has managed to develop some form of decentralized app (DApp) ecosystem over the past few years — thanks to Layer 2 technologies like Bitlayer, Stacks (STX), Merlin Chain and Rootstock (RSK). Native Bitcoin protocols and new token standards — Ordinals, BRC-20 and Runes — as well as the Bitcoin Taproot upgrade have also contributed to the development of (modest) smart contract–like functions on the chain. Thanks to these innovations, an entirely new field, Bitcoin-based decentralized finance (BTCFi), has emerged.
Unfortunately, the BTCFi niche remains underdeveloped compared to the thriving DeFi ecosystem of Ethereum (ETH) and other smart contract chains. One key reason for this deficit is the lack of sophisticated DeFi functionality within the Bitcoin ecosystem, with few protocols capable of offering full-fledged lending, borrowing and yield management services.
Another problem is the limited liquidity due to traders' inertia — having invested their time and funds in Ethereum and other smart blockchains, many DeFi users are unwilling to explore Bitcoin-based opportunities.
bitSmiley (SMILE) is a BTCFi project that aims to expand BTC-backed stablecoin and lending functions to various platforms beyond Bitcoin. Users of the platform can take advantage of BTC-collateralized stablecoin minting and lending services, with the issued assets usable on a wide variety of DeFi apps across many chains, including Ethereum. By offering these services, bitSmiley hopes to expand the usability of BTC funds well beyond Bitcoin's still immature DeFi environment.
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