Due to recent weakness in the Decentralized Finance (DeFi) sector Michael Saylor, Bitcoin (BTC), maximalist at MicroStrategy, believes that Bitcoin and the Lightning Network can save the DeFi market.
The DeFi sector is facing severe difficulties due to two huge protocols, Terra and Celcius. They are both in trouble within a month. Saylor recently suggested that Lightning and Bitcoin could be used to stabilize the sector.
Saylor stated that Bitcoin is a solid economic, ethical, and technical foundation for DeFi. He stated that the Lightning protocol, as well as the BTC token, will be used for the construction of the next generation DeFi.
#Bitcoin is the sound economic, technical and ethical foundation for DeFi. The next generation of DeFi will be built using the #Lightning protocol and the #BTC token.https://t.co/5LlNlXkLMt
— Michael Saylor (@saylor) June 14, 2022
Saylor responded to a Bloomberg story Tuesday. He highlighted many key concerns in DeFi. Bloomberg was told by Mahin Gupta (founder of digital-asset custody platform Liminal), that:
“What’s happening with Celsius will have serious consequences for the industry.” It is a significant player and its failure will have ripple consequences.”
Celsius Networks has stopped withdrawals and other transactions from its platform within a month of the collapse of Terra’s blockchain. This was despite the fact that it offered investors yearly returns of 20%. The collapse of Terra was caused by its stablecoin losing its 1-to-1 peg against the U.S. Dollar. Celsius’s halt in withdrawals has added to cryptocurrency’s losses.
The MicroStrategy CEO is enthusiastic about Lightning Network, Bitcoin’s Layer 2 scaling solution. Saylor believes that Bitcoin is the future of money, and that the Lightning protocol will help in transaction scaling. He also said that:
He stated that if you want to make payments and transact fast, you will need a base layer which is ethically sound, financially sound, and technically sound. That’s exactly what Bitcoin is. Then, billions upon billions of transactions will be made on a layer 2, like Lightning.
DeFi apps on Bitcoin have not yet achieved the same popularity as other blockchains such as Ethereum (ETH), Solana (SOL) and Solana. However, DeFi is still considered viable by some who have studied it. They believe “stablecoins” and “fully collateralized loans against your BTC are both possible.
Related: Charges for capacity on the Bitcoin Lightning Network starting at 4,000 BTC
Wil Lee, creator of the nonfungible token (NFT), said that BTC and LN could give DeFi and NFTs an energy boost. Cointelegraph was informed by Lee that although many new protocols are still being developed, protocols such as LN and BTC already show their inherent strength.
Stability is essential for anyone wanting to get into crypto. Knowing that a protocol has been established gives me peace of mind. This helps strengthen the crypto ecosystem. Your DeFi or NFT project will be supported by BTC.
According to Aliasgar Merchant of Ignite, DeFi is “struggling” while everyone is trying their best to get through the crypto winter. DeFi, which was supposed to be the core and foundation of Web3, is showing signs of failure. He highlighted the recent events at Terra and Celius. Merchant stated that interoperability is the most important aspect of building a solid DeFi platform. Merchant said that once the foundation is established, we can focus more on niche protocols to meet our DeFi needs.
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