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Stablecoin Market Review — Sept 2024

BitU — Wed, 04 Sep 2024 07:23:18 GMT

Stablecoin Market Review — Sept 2024

2024 Crypto Stablecoin Report

BitU Protocol today unveiled its latest “Stablecoin Market Review — 2024 September,” offering an in-depth look at the evolving stablecoin landscape and its interplay with major cryptocurrency assets. The report highlights significant market trends, stablecoin performance, and critical correlations that impact the broader crypto ecosystem.

Over the past year, the market capitalization of stablecoins has shown consistent growth, driving key market movements. The review explores the notable performance of major stablecoins such as USDT, USDC, and DAI, while also focusing on rapidly emerging players like PYUSD, USDe, BitU and BUIDL.

Read and download the report for free:

English: https://docsend.com/v/g63d5/stablecoin_overview_sept2024_en
Chinese: https://docsend.com/v/g63d5/stablecoin_overview_sept2024_cn

Over the past year, the market cap of stablecoins has been on a steady rise. This capital influx has been a core driver behind the rising prices of cryptos. BTC has surged by nearly 122% over the past year, while ETH has lagged slightly with a 48.52% increase.
However, in recent times, the inflow into stablecoins has noticeably slowed, although it remains positive. Despite this continued inflow, the prices of mainstream assets like BTC and ETH have not followed suit. Instead, both have seen declines in their prices.
BTC has dropped approximately 10% over the past 120 days, while ETH has seen a sharper decline of nearly 22%. In the past two months alone, ETH’s losses have been even more pronounced, with a drop of over 26%. BTC, on the other hand, has experienced a slight recovery, with a decline of just 4.8%.

Excluding USDT and USDC, DAI, the third-largest stablecoin by market cap and the largest decentralized stablecoin, has shown little change in its market cap over the past year.
In contrast, PYUSD, USDe, FDUSD, and USDY have grown rapidly. PYUSD’s market cap surged 16,532% over the past year and continues its strong momentum. USDe has grown 3,151% this year, though recent market challenges have caused a significant decline.
FDUSD, positioned as a replacement for BUSD and supported by Binance, has seen a 547% increase over the past year. USDY, a leading RWA stablecoin, has also experienced rapid growth this year. BUIDL, now the dominant RWA stablecoin, has surpassed a market cap of $500M.
BUIDL differs from other stablecoins as it is classified as a security.

So far this year, the top five fastest-growing stablecoins with a market cap exceeding $10M are USDe, USDY, BITU, USD+, and PYUSD.
These five projects share a common feature: users can earn steady, “risk-free” yields by holding or staking these stablecoins in specific contracts.
It is clear that the stablecoins that manage to stand out in today’s market are not merely fulfilling the role of a transaction medium but are increasingly meeting the demand for stable returns.

The significant drop in BUSD’s market capitalization stems from regulatory reasons.
Additionally, half of the top losers are relatively native DeFi projects: LUSD (Liquidity), USX (dForce), SUSD (Synthetix), MIM (Abracadabra.money), and FRAX (Frax).

Read and download the report for free:

English: https://docsend.com/v/g63d5/stablecoin_overview_sept2024_en
Chinese: https://docsend.com/v/g63d5/stablecoin_overview_sept2024_cn

About BitU Protocol

BitU Protocol is a decentralized credit network and omni-trading hub powered by the overcollateralized $BITU stablecoin that can be staked to earn real yield. Access deep liquidity across numerous markets from a single unified experience.

BitU Protocol enables users to mint $BITU, a secure and resilient USD-pegged stablecoin designed to deliver access to reliable yields with minimal volatility risk. Users can stake $BITU and receive $sBITU to earn real-yield. $BITU can also be used as collateral on the omni-trading hub, which offers deep liquidity to various centralized exchanges from a single trading terminal.

BitU Monthly Roundup: August 2024

BitU — Tue, 27 Aug 2024 08:47:30 GMT

Hello, friends!

Thank you for your ongoing support of the BitU project. The past few months have been eventful for the crypto market, and BitU Protocol has made remarkable progress.

What is BitU Protocol?

The BitU Protocol is primarily composed of three key components:

BITU Liquidity: Whitelisted users can mint additional BITU stablecoins, while other users can acquire BITU stablecoins through DEX liquidity.
BITU Staking: Stake BITU to earn real yields generated from the protocol’s collateralized assets.
Omni Trade: Utilize BITU as a stablecoin asset to tap into liquidity across major centralized exchanges, benefiting from lower fees and an improved trading experience.

Current Status

BITU Liquidity and Staking are now live, and Omni Trade will be launched soon!

Financial Data

BitU Financial Data-Collaterals

As of August 27, 2024, BitU Protocol’s total assets, including BTC and USDT, are valued at approximately $22 million, with BTC at $18.77 million and USDT at $3.44 million.

The total supply of $BITU is 13.54 million, with 10.5 million staked and 3 million unstaked.

BitU Financial Data-Earnings

In terms of earnings, as of August 27, 2024, BitU Protocol has generated $205,270 in revenue from $BITU collateral, of which $98,379 has been distributed to $BITU stakers via smart contracts, with $106,891 pending distribution.

$BITU staking rewards are distributed daily, and all records are transparently available for users to view at any time.

Transparency page for $BITU staking rewards: Transparency Page

All transaction sets for earnings distribution: BscScan Transactions

Regarding yields, BitU Protocol continues to perform well, with:

7-day average APY at 9.78%
14-day average APY at 9.80%
30-day average APY at 10.09%

Source of Earnings

As detailed in our documentation, BitU Staking’s earnings come from off-chain liquidity in the crypto market. When users mint $BITU using collateral, the collateral is securely stored with third-party custodians. These assets are then mapped to centralized exchanges and utilized in market-neutral strategies or in-house lending.

BitU collaborates with LTP, one of the largest prime brokers in the crypto market, to manage these mapped assets. This approach ensures asset security while aiming to maximize returns for users.

BitU Staking Working Process

All our smart contracts are open-source and have been audited by multiple firms. For more information, please check our official documentation: BitU Documentation

We are listed on Defillama!

We are excited to announce that BitU Protocol is now listed on DefiLlama.

https://defillama.com/protocol/bitu-protocol

Our $sBITU earnings data has also been listed in DefiLlama’s Yields module.

https://defillama.com/yields/pool/0c0c152b-6f8e-4df8-8225-dc0352c6b749

We have won!

BitU Protocol secured second place in the BNB Chain TVL Incentive Program!

https://x.com/BNBCHAIN/status/1819403140015456603

A Fantastic Twitter Space

Recently, we participated in several market events, including a BTCB discussion with BNB Chain, Solv Protocol, and Avalon Labs.

https://x.com/BNBCHAIN/status/1825632240493277349

Singapore 2049

We’re thrilled to announce that during 2049, we will be co-hosting an offline event, Crazy Crypto Durian & BounceClub Arcade, with Bouncebit, LTP, NGC, BTSE, and FV Bank!

No Panels. No Talks. No BS. Chill and Good Vibes Only.

https://lu.ma/wf4wttn4

Upcoming — DEX liquidity！

We have more exciting updates and news coming soon. We can’t wait to launch what we’ve been working on since our last big update.

We understand it can be frustrating that only whitelisted addresses are currently allowed to mint $BITU, but we’re working on it!

Yes, you will soon be able to get $BITU on DEXes, meaning anyone with an address will be able to interact with BitU Protocol and earn the attractive yields mentioned above.

Upcoming — Omni Trade！

As mentioned in our documentation, the Omni trading hub is about to go live!

You will soon be able to access centralized exchange liquidity through our Omni Trading Hub, all in a permissionless way.

Our stablecoin, $BITU, will play a crucial role. You’ll be able to use $BITU as collateral and trade nearly anything you want!

About BitU Protocol

BitU Protocol: A Hedge Against Debt, Inflation, and Uncertainty

BitU — Tue, 27 Aug 2024 07:40:34 GMT

Concerns over stagflation and recession dominate the news as nations around the world continue to endure an economic slowdown. In recent years, international trade has stalled, foreign exchange has become more volatile, and consumption across the world has slowed. Many of these problems are significantly influenced by the US economy, particularly the Federal Reserve’s high interest rates that were hiked to curb inflation stemming from debt and high expenditure in the wake of the pandemic. Despite this, there are hopes that US dollar stablecoins can help solve some of these issues.

A number of experts recently stated that stablecoins may occupy a significant place in the government debt market as foreign holdings of this debt decrease. Several countries have been decoupling their reliance on the US economy and banking system to reduce risk by shifting focus to other countries for trade, denominating transactions in local currencies, and selling US Treasury bills.

A decrease in demand for US government debt, as expenditure and interest on the debt add up, places the future of the US economy in a very uneasy position. Economists and politicians have been concerned about a possible failed Treasury auction, which would likely lead to drastic cuts to the US budget and restricted ability for the government to influence growth.

Former US House speaker Paul Ryan recently wrote that crypto can help stave off a debt crisis because many stablecoin firms are backing their value with purchases of US government debt. These purchases have not been insignificant, as Ryan said that if stablecoin issuers were a country, they would be in the top 10 holders of US Treasurys.

Centralized stablecoin issuers such as Circle (USDC) and Tether (USDT) back their US-denominated digital currencies with a number of investments such as Bitcoin, Money Market Funds, and U.S. Treasury Bills, the latter accounting for around 80% of Tether’s $1.1 billion reserves. Paolo Ardoino, CEO of Tether, also wrote that more than 300 million people are using USDT, especially in developing countries.

Stablecoins have the potential to benefit the broader economy, but it is uncertain which stakeholders these companies are ultimately benefiting. Tether released their Q1 2024 attestation report, revealing a record-breaking $4.52 billion profit, mostly due to their US Treasury bill holdings. While this enormous profit highlights the success of the BVI incorporated company, it doesn’t go far enough to resolve the economic problems many hope it can.

This past year in crypto saw the rise of yield-bearing stablecoins, such as BitU Protocol, which can be a true hedge against systematic risk from US debt, inflation, and economic uncertainty. While $BITU functions as a standard US-dollar denominated stablecoin, it does not rely on US Treasurys for value. The upside of this is that value is sourced from overcollateralized positions of deposited Bitcoin, further enabling true decentralization and transparent stability.

While the benefit of dependency on US Treasurys is the yield from interest rates, stablecoins using Treasurys may have to find new investment sources to maintain their value and generate profit for those firms once the US economy begins to recover. This is why BitU Protocol enables users to stake $BITU and receive $sBITU, which grants holders passive yield from delta neutral strategies and interest from lending. Staked $BITU maintains the underlying value of 1 US Dollar per token while accumulating yield from interest, helping holders fight against inflation, which has averaged more than 4% annually over the past five years.

Yield-bearing stablecoins bring new stakeholders to the conversation who have been left out at a loss. Holding Treasury-backed stablecoins turns holders into products that receive diminishing returns due to inflation. Holding yield-bearing stablecoins turns holders into stakeholders that gain from yield that would otherwise go to corporate profits. These stakeholders also have a greater impact on the success of the company as competition increases to provide better security, avenues for use, and sustainable yield.

Lastly, centralized stablecoins struggle to promise true financial freedom to their holders. With US elections nearing, politicians are also becoming more open to blockchain technology and cryptocurrencies despite a long history of siding against it. While there have been efforts in the US to ban CBDCs, the US financial system is a complex labyrinth that punishes low-income workers with fees, delays, and restrictions on transactions.

In politically volatile times, such as during the 2011 Occupy Wall Street movement and the 2022 Canadian convoy protest, the freedom to transact, withdraw savings, or even pay for regular goods and services was restricted. Centralized stablecoins can be programmed to follow these restrictions, but BitU Protocol isn’t able to arbitrarily freeze users’ funds.

The true hedge against debt, inflation, and uncertainty lies in decentralized yield-bearing stablecoins. As these tokens become more popular, US dollars will flow to purchase decentralized assets such as $sBITU or Bitcoin, which can be accepted as collateral for $BITU, instead of US Treasurys that only enrich companies that become an extension of the status-quo. Real innovation aims to disrupt a faulty system instead of making it more efficient.

About BitU Protocol

Website: bitu.io

Twitter: https://x.com/BitU_Protocol

BitU Protocol: CeDeFi — A New Approach for a Transparent and Secure Crypto Future

BitU — Tue, 14 May 2024 14:09:55 GMT

CeDeFi: A New Approach to Crypto Transparency and Security

Discover BitU Protocol’s Innovative Solution for Bridging CeFi and DeFi, Ensuring Transparent and Secure Financial Transactions While Unlocking Higher Yields and New Opportunities for Bitcoin.

In the rapidly evolving world of cryptocurrency, trust and transparency remain elusive yet crucial elements. Imagine a stablecoin that not only guarantees security and transparency but also bridges the gap between centralized and decentralized finance, creating a seamless ecosystem where your assets work harder for you. Enter BitU Protocol — redefining the landscape of stablecoins and leading the charge in the CeDeFi revolution.

BitU is more than just a stablecoin; it’s a pioneering solution designed to address the core issues plaguing the cryptocurrency market today. By combining the robust security and regulatory compliance of centralized finance (CeFi) with the transparency and innovation of decentralized finance (DeFi), BitU offers a trusted, yield-generating stablecoin that stands at the forefront of BNB Chain ecosystem and BitcoinFi development.

Key questions addressed in this article:

How can BitU ensure the transparency and security that centralized stablecoins often lack?
What makes its approach to bridging CeFi and DeFi unique and effective?
How does BitU support the growth of the Bitcoin ecosystem while providing robust financial returns for its users?

Join us as we explore these questions and uncover how BitU is transforming financial trust and stability, one block at a time.

Challenges Faced by Stablecoins

The Blackbox

More than 92% of stablecoins are centralized

The current mainstream solutions for stablecoins in the market are predominantly fully centralized. In this approach, the issuer of the stablecoin holds reserve assets, such as USD, in traditional financial institutions and then mints stablecoins on the blockchain based on those reserves.

This method has captured the majority share of stablecoins in the crypto market, with centralized stablecoins like USDT and USDC accounting for over 92% of the market. Despite their large scale, the lack of transparency has always been a significant concern with centralized stablecoins. Users have been unable to verify with confidence that these stablecoin issuers possess sufficient reserves. The transparency reports published by the issuers themselves have not been convincing enough for the market and users.

Centralized stablecoins have also experienced several instances of being unpegged in the past few years, with the most severe case being the unpegging of USDC due to the bankruptcy of Silicon Valley Bank. In March 2023, one of the six banks collaborating with USDC, Silicon Valley Bank, went bankrupt. Since approximately $3.3 billion of USDC’s reserve assets were held in Silicon Valley Bank, the market became concerned about the adequacy of the reserve assets to support the circulating value of USDC, leading to its unpegging. On that day, the price of USDC dropped to a low of $0.8698, representing a decline of about 13% from its pegged value of $1.

These incidents demonstrate that even with the endorsement of traditional financial institutions, trust remains fragile. Establishing trust in the financial industry has always been a lengthy and challenging process, but the erosion of trust can occur in an instant.

Fundamentally, the solution adopted by centralized stablecoins remains an opaque black box for users. Users are required to trust this black box and hope that nothing unexpected happens.

One of the essential characteristics of blockchain technology is its ability to be used securely without permission or trust. Compared to relying on trust to use a product, users are more inclined towards solutions that can eliminate the possibility of unexpected incidents through technology and mechanisms.

After all, one of the main core principles of crypto is the saying “verify, don’t trust”

Depeg of USDC in March 2023

Unfair Distribution of Profits

Regardless of whether the collateral assets for stablecoins are denominated in USD or other assets, there is also an issue of unfairness in the distribution of profits.

Taking USDT as an example, users who provide USD as reserve assets receive USD stablecoins issued by Tether. However, the investment profits generated from the reserve assets are entirely owned by Tether, the issuing company. These profits are derived from the USD provided by users, but users do not receive any share of the profits.

According to transparency reports released by Tether, the majority of the reserve assets, including over 67%, are invested in various activities, with the primary investment being in U.S. Treasury bonds.

Breakdown of USDT Reserve

Tether company currently holds reserve assets totaling over $110 billion, which generates substantial annual profits. In fact, “Tether’s attestation for the first quarter of 2024 revealed the firm made a net profit of $4.52 billion, saw its highest-ever percentage ownership of Treasury bills and had total net equity exceeding $11.3 billion [1]”. However, unfortunately, even though these funds inherently belong to the users, ordinary users are unable to receive a share of these immense profits.

The Blacklist Risk

One of the core functionalities of blockchain is being permissionless, which means that applications built using blockchain technology should be open for anyone to use[1]. The developers of the application should not prevent any user from interacting with blockchain applications at the smart contract level. Additionally, another core principle of DeFi applications is to support the unbanked, providing financial services to users who cannot access traditional financial industry services.

According to a study from 2021 by the World Bank “Globally, about 1.4 billion adults remain unbanked — without an account at a financial institution or through a mobile money provider.” [2]

However, centralized stablecoin issuers like USDT and USDC have the ability to freeze any user’s account at any time, adding their wallet address to a blacklist and locking their assets[3].

In fact, as of now, USDT and USDC have blacklisted over 1,600 addresses, freezing over $1.1 billion in funds[4].

The Blacklist Problem

Challenges Faced by DeFi

Lack of Native Underlying Revenue

Since the rise of DeFi from the “DeFi Summer” a few years ago, it has gone through multiple iterations and innovations. Most DeFi projects typically use their protocol’s native token as an incentive mechanism for protocol bootstrapping, attracting more users and funds to participate.

This approach was highly effective in the early stages. During bullish market conditions, token prices were expected to rise significantly, resulting in substantial rewards for users. However, after going through a full market cycle, this model becomes challenging to sustain. The core reason behind this is the high token inflationary supply and selling pressure caused by attracting users through token rewards. As token prices decline, rewards diminish, leading to many protocols becoming deserted.

Looking back, the essence of this model is to attract users using newly minted project tokens, which do not represent real sustainable earnings. In the realm of blockchain, meaningful earnings can be categorized into three main types:

Transaction fees on the blockchain network.
Earnings generated from lending and borrowing activities.
Trading fees for liquidity providers.

First, blockchain transaction fees generally are allocated to node operators, who are limited in number and involve significant overhead costs. However, the real opportunities for ordinary users are through lending their assets and fees generated from DEX trading. Lenders pay interest to users who provide liquidity through the protocols, and traders pay transaction fees to liquidity providers.

During periods of high blockchain network activity and increased demand for funds, these two types of real earnings also increase. However, during market downturns or periods of low on-chain activity, these earnings are relatively low.

What’s more, many other DeFi protocols rely on these two types of revenue-generating systems as their underlying infrastructure which saw the rise of the term “Real Yield”. The building blocks of DeFi, often referred to as ‘DeFi Lego’, also depend on these underlying projects to generate real earnings.

It’s essential to have projects that can generate real earnings beyond just the protocol’s native tokens. This is a crucial underlying infrastructure for the development of a healthy ecosystem. These protocols generally serve as an ‘anchor,’ allowing larger-scale protocols to be built on top of them.

CeDeFi

Yield Gap Between On-Chain and Off-Chain

The yield gap between on-chain and off-chain investments refers to the differences in returns between funds managed off the blockchain and those on it. Here’s a breakdown to clarify this concept:

Definitions:

Off-Chain Funds: Associated with centralized institutions such as exchanges, where funds are used for centralized business activities.
On-Chain Funds: Held by users in decentralized formats, such as wallets or protocols directly on the blockchain such as smart contracts.

Off-chain transactions often feature higher performance and liquidity, which facilitates greater capital utilization, larger trading volumes, and a broader user base. These factors collectively drive a higher demand for funds off-chain. Conversely, on-chain activities usually operate on a smaller scale with relatively lower demand for funds. This fundamental difference in scale and demand is the core reason behind the persistent yield disparity.

The core reasons for this persistent yield difference include:

Costs of Fund Circulation

Transferring funds between off-chain to on-chain, or vice versa, typically requires users to initiate an on-chain transaction. In addition to the transaction fees incurred, there are often hidden risks in the circulation of funds on the blockchain. Blockchain transactions and addresses often consist of strings of data that may not carry explicit meaning to users and can occur on most Layer 1 or Layer 2 solutions, introducing implicit risks and UX complexity. Furthermore, external phishing attacks are also a concern. These hidden factors represent the hidden costs of blockchain transactions [1].

Costs of On-Chain Fund Storage

The security of funds has long been a recurring issue, with numerous incidents of wallet theft within the industry. Frequent users of decentralized wallets have likely experienced such events to some extent, including cases of leaked mnemonic phrases, stolen private keys, or losses caused by phishing software or websites. These ongoing security vulnerabilities lead many users to opt for storing their funds with large centralized institutions rather than in their own decentralized self-custody wallets. However, funds held in centralized institutions cannot directly interact with on-chain applications and need to be transferred back to decentralized wallets for to be used for DeFi and other on-chain activities.

Costs of On-Chain Application Security

Apart from the additional costs associated with fund storage, there are additional risks when interacting with on-chain applications and participating in profit-generating activities. Smart contracts, a notable innovation of Ethereum that extended to other blockchains, are immutable once deployed on the blockchain. Combined with potential vulnerabilities in smart contracts, there have been numerous instances of funds being lost within on-chain applications due to attacks.

The security risks associated with funds are a significant factor that discourages many users from investing in on-chain applications.

Costs of On-Chain Application Usage

For users who have been utilizing decentralized applications (dApps) for years, this may not be considered a significant cost. However, when considering the broader range of cryptocurrency users, this becomes a substantial barrier. Even after more than a decade of blockchain and cryptocurrency development, there are still many users who do not have their own decentralized wallets and may solely rely on centralized exchanges. Installing software, understanding concepts such as mnemonic phrases, private keys, and gas fees, are complex tasks for many newcomers. This hinders the flow of funds from the off-chain world to the on-chain for many users.

Time Delay Between On-Chain and Off-Chain

Blockchain networks are self-contained and closed systems, and changes in data within these networks can only occur through external transaction events. These transaction events can be broadly categorized as data updates brought into the blockchain network by oracles or new transaction events initiated by users. The time it takes for information to be transmitted between the on-chain and off-chain worlds is different. Events occurring off-chain and their impact on core data, such as prices, generally propagate faster than their impact on the on-chain world.

CeDeFi Solutions: Merging CeFi Efficiency with DeFi Security

Given the disparity in returns between on-chain and off-chain funds, the key question arises: Can we bridge this gap by addressing the underlying issues? Specifically, can we enhance returns for on-chain funds, increase liquidity for off-chain transactions, and establish a robust income layer for other on-chain applications? The answer is yes, through CeDeFi.

Centralized Finance (CeFi), traditionally supported by institutions such as centralized exchanges, market makers, and banks, offers efficiency and a broad user base. On the other hand, Decentralized Finance (DeFi) leverages blockchain and smart contracts to ensure transparency and self-custody. CeDeFi combines these models to harness the efficiency and scalability of CeFi while maintaining the core benefits of DeFi. This hybrid approach not only enhances fund security but also optimizes returns and liquidity across both realms.

By integrating the strengths of both centralized and decentralized models, CeDeFi can provide an innovative solution to the financial discrepancies currently observed between on-chain and off-chain ecosystems.

BitU’s approach to merging the CeFi and DeFI under one innovative CeDeFi framework

In the previous sections, we analyzed the costs associated with using on-chain applications and the challenges posed by security risks. Introducing a secure third-party custodian that bridges on-chain and off-chain applications could mitigate many of these issues and enhance capital deployment efficiency. By leveraging professional institutions dedicated to ensuring fund security, we can effectively address and reduce these risks.

The CeDeFi Approach

In this scenario, the user interaction process with the protocol would be as follows:

Users directly interact with decentralized protocols, which can be accessible by any user at any time.
Users’ funds are transferred to a trusted custodian for safekeeping, ensuring absolute fund safety that can be verified on-chain at all times.
Off-chain applications utilize the funds held by the custodian through fund mirroring, without any actual transfer of funds.
The higher returns generated by off-chain applications are distributed to the users, creating a lucrative flywheel.
Users can retrieve their funds stored with the custodian at any time through on-chain applications.

In summary, by effectively combining CeFi and DeFi and designing appropriate mechanisms, CeDeFi can bring significant advantages:

Ease of Access: New users can engage with CeDeFi protocols and enjoy CeFi features through DeFi integration.
Seamless Integration: DeFi applications can easily integrate and deploy modules within CeDeFi applications.
Cost Efficiency and Enhanced User Experience: By reducing the high transaction fees of DeFi, CeDeFi can provide lower transaction costs and a smoother user experience.
Optimized Returns: By leveraging off-chain liquidity and efficiency, CeDeFi can offer higher and more stable returns for on-chain funds.
Robust Security: CeDeFi ensures the security and transparency of DeFi funds by introducing licensed third-party custodians.
Regulatory Compliance: While exploring blockchain products and infrastructure, CeDeFi can also meet necessary traditional financial regulations such as AML (Anti-Money Laundering).

Supporting the Growth of the BitcoinFi Ecosystem

Since the approval of Bitcoin spot ETFs in the US and HK markets, the entire crypto market has experienced a frenzy. Apart from gaining significant attention in traditional financial markets, the entire crypto ecosystem has also begun to explore Bitcoin more deeply.

For a long time, Bitcoin has primarily served as a store of value and had limited participation in decentralized finance (DeFi). The main Bitcoin tokens involved in decentralized applications are WBTC (Wrapped Bitcoin) and BTCB (Bitcoin BEP2). However, even when combining the total supply of these two largest tokens, it accounts for only slightly over 210,000 Bitcoins, which is approximately 1% of the total Bitcoin supply.

Even considering the Bitcoin balances on exchanges, there is still a significant amount of Bitcoin lying idle. The key factor behind this is that most people still view Bitcoin as a reserve asset and place great importance on its security. If the potential returns from using Bitcoin in applications are minimal, most individuals would not be willing to sacrifice a certain level of security for limited gains.

Bitcoin On-Chain and the potential of BitcoinFi

Supporting the Growth of the Bitcoin Ecosystem

The development of Bitcoin-backed stablecoins like BitU can greatly support the growth of Bitcoin’s on-chain ecosystem aka BitcoinFi. Currently, there are dozens of Layer 1 and Layer 2 solutions that support different flavors of Bitcoin. However, the native Bitcoin ecosystem requires substantial resource support to establish reliable underlying income protocols.

BitU Protocol aims to provide a continuous and stable source of income for Bitcoin ecosystem. Once such income protocols are in place, more funds will be able to remain within the Bitcoin ecosystem rather than flowing out to other chains. This will enable the emergence of various new asset types on Bitcoin.

Enabling Increased Economic Activity

With more funds and asset categories staying within Bitcoin, there will inevitably be increased activity in trading, lending, and other financial services in the ecosystem. BitU can play a key role here by providing a trusted stablecoin solution.

As a crypto-native collateralized stablecoin protocol, BitU leverages off-chain liquidity and efficiency to deliver higher yields. BitU’s CeDeFi approach, combining aspects of centralized and decentralized finance, is well-suited to enabling this increased economic activity on Bitcoin in a more efficient yet still decentralized manner.

Expanding to Other Ecosystems

While the Bitcoin ecosystem will be a crucial part of BitU’s initial development path, the protocol also plans to expand into other blockchain ecosystems in the future. By establishing itself first on Bitcoin and then bringing its stablecoin and CeDeFi solutions to other chains, BitU can help drive growth across the broader crypto ecosystem.

Evidently, by providing a reliable and high-yield stablecoin protocol, BitU aims to help more value accrue to and remain on-chain. This will support the development of Bitcoin’s on-chain economy and provide a sustainable foundation for the network’s long-term growth. Over time, BitU intends to bring these benefits to other blockchain ecosystems as well.

Conclusion

CeDeFi represents a groundbreaking fusion of centralized and decentralized finance, offering a strategic blend that leverages the best of both worlds. By integrating the robust security and regulatory compliance of CeFi with the innovative, transparent protocols of DeFi, BitU stands at the forefront of this transformation. This hybrid approach not only enhances fund security and accessibility but also maximizes returns for investors, thereby accelerating crypto adoption across various sectors.

Central to BitU’s offerings is our stablecoin, backed by the robustness of Bitcoin — a testament to our commitment to reliability and innovation. BitU’s pioneering platform ensures that users enjoy optimized returns through seamless fund integration, lower transaction costs, and enhanced user experiences. As we continue to refine and expand our offerings, the potential for CeDeFi to reshape the financial landscape becomes increasingly apparent, promising a more inclusive and efficient future.

Get Involved

For more detailed information about how BitU is driving this innovation, we invite you to visit our website, explore our documentation, and follow us on Twitter. Join us in shaping the future of finance!

Visit our Website | Read the Docs | Follow us on Twitter

Introducing BitU Protocol

BitU — Mon, 22 Apr 2024 02:37:22 GMT

BitU Protocol-The Infinitely Sustainable Yield Stablecoin

BitU is a crypto-native collateralized stablecoin protocol that leverages off-chain liquidity and efficiency to deliver higher yield. The BitU Protocol tackles low yields on idle crypto assets, a lack of high-yield passive investments, and the need for a stablecoin to boost Web3 and cryptocurrency adoption. It introduces a solution by enabling the creation of BITU stablecoins, fostering a capital-efficient ecosystem through DeFi platform integration and enhancing asset utility with its Active Liquidity Management Module. BitU’s goal is to drive the crypto economy toward more decentralization and efficiency, facilitating widespread adoption and unlocking new opportunities for financial growth and freedom.

Introduction

BitU is a crypto-native collateralized stablecoin protocol that leverages off-chain liquidity and efficiency to deliver higher yield.

BitU enables users to mint $BITU, a fully-backed stablecoin, using major crypto assets supported by the protocol. $BITU is a crypto-native stablecoin with embedded yield. With the issuance of $BITU, BitU protocol will break the BOUNDARY, and the LIMITATION of on-chain funds and activities to a new era.

The problems

Bitcoin & other assets sitting idle on-chain and not generating any yield.

Bitcoins and other cryptocurrencies that remain dormant on their blockchains fail to yield any returns for their owners. A prime example of this is in the BNB ecosystem, which holds approximately 68,000 Bitcoin, a vast majority of which are not being utilized to their full potential. This widespread underutilization of assets presents a notable opportunity within the cryptocurrency market.

Activating these idle assets through the appropriate mechanisms and platforms can significantly benefit the financial well-being of asset holders by contributing to their growth. Moreover, this activation serves to enhance the liquidity and vitality of the entire crypto economy.

In essence, generating yield from these dormant cryptocurrencies not only benefits individual owners but also strengthens the wider cryptocurrency ecosystem. This reflects the overarching need for financial instruments that are both accessible and productive on a global scale, suggesting a pathway toward optimizing the utility and value of digital assets across the board.

Users need high-yield passive investment products, but there are not many available

High demand for high-yield passive investments is clear, with 70% of retail investors in a 2023 report looking for such options, yet only 15% of investment products meet their expectations, revealing a significant market gap. Despite its potential for high returns, the crypto sector still underutilizes assets for passive income, with less than 10% of a $2 trillion market cap employed thus in early 2023.

Expanding high-yield passive investment offerings can spur growth across traditional and crypto sectors, fulfilling investor demand and yielding economic benefits. Such development addresses a vital need, leveraging the broad interest in high-yield opportunities and underscoring the role of these instruments in enhancing global financial empowerment.

Ultimately, filling this gap not only satisfies a pressing demand but also promotes financial inclusion, enabling wealth growth through accessible and efficient investments.

Native crypto stablecoin is necessary for the massive adoption of Web3/cryptocurrency

The cryptocurrency and stablecoin markets exhibit significant growth potential, underscored by historical data that link stablecoin usage with increases in the overall cryptocurrency market capitalization. Bitcoin achieving record highs and becoming the eighth largest global asset, coupled with the SEC’s approval of Bitcoin ETFs, indicates a promising trajectory for attracting more investors and fueling future market expansion.

Survey findings from the Blockchain Research Lab in 2023 reveal that 60% of cryptocurrency users favor stablecoins due to their predictability and reduced volatility, highlighting their importance in daily transactions and the operation of Web3. Additionally, DeFi platforms integrating stablecoins have experienced a 40% surge in user engagement, emphasizing the critical role of native stablecoins in enhancing Web3 ecosystem interoperability and encouraging wider adoption.

The emergence of native stablecoins as a preferred solution is driven by the challenges faced by centralized and algorithmic stablecoins, including issues with transparency, susceptibility to censorship, banking risks, and price stability. While centralized stablecoins currently dominate the market with a 90% share, their limitations pave the way for native stablecoins, which promise enhanced stability, security, and returns. This shift anticipates native stablecoins gaining a larger market share, reflecting the unequivocal demand for stable and dependable financial instruments in the crypto space. Consequently, the development and integration of native crypto stablecoins are pivotal in accelerating the global adoption and practical application of Web3 and cryptocurrency technologies, marking a significant step forward in the digital financial landscape.

The solution

$BITU, a native stablecoin backed by mainstream crypto assets, aims to strike a perfect balance by addressing the advantages and disadvantages of existing stablecoins in the market. This approach aims to redefine the boundaries between stablecoins and DeFi.

Stability

BitU ensures the safety of user assets by storing them in trusted custodial institutions. Additionally, ALMM provides sufficient liquidity for $BITU in the market and ensures smooth minting and redemption processes.

High Yield

Leveraging the ALMM, BitU maximizes the utilization of collateral assets while generating profits in a secure manner, which are then returned to the users.

Censorship Resistance

Anyone can use $BITU, and it does not require users to have a bank account or undergo identity verification. BitU aims to enable everyone to enjoy comprehensive Web3 financial services through vast DeFi opportunities.

A Key Innovation of BitU Protocol

One of the most innovative components of the BitU protocol is its Active Liquidity Management Module (ALMM). The fundamental logic behind ALMM lies in the fact that off-chain liquidity, transaction processing capacity, and yield are generally higher than in on-chain scenarios. Therefore, ALMM leverages off-chain transaction activities securely and transparently to generate income, which is then distributed back to on-chain $sBITU holders. Through this approach, users can achieve higher returns by efficiently utilizing their funds. BitU protocol hybrid approach leverages off-chain liquidity to enhance on-chain fund efficiency and yield. The protocol’s stablecoin issuance increases with more user participation, facilitating the creation of diverse use cases for stablecoins.

ALMM plays a vital role in:

Risk Management and Portfolio Liquidation
Providing Initial Liquidity for $BITU
Earning Yield through Delta-Neutral Strategies
Redemption of $BITU and Collateral Assets

In conclusion, BitU Protocol emerges as a transformative solution to the challenges facing traditional stablecoins and decentralized finance platforms. With its innovative approach, robust architecture, and commitment to user empowerment through safe and sustainable returns, BitU Protocol is poised to redefine the stablecoin issuance landscape, leading to a new era of stability, scalability, and accessibility in the crypto ecosystem.

Next steps

April 2024, we anticipate the Mainnet Launch, along with the initiation of the Minting Whitelist Application process and the integration of Custody & Exchanges. Apply for the whitelist here
At the end of Q2 2024, we plan to launch our Incentive Program and Ambassador Program, to boostrape our community. Marking significant milestones in our project’s development journey.

The BitU team will provide further in-depth analysis here, covering various aspects of $BITU and the crypto-market structure.

Meanwhile, stay updated on our Twitter for additional early information on supporting BitU and becoming an early user.

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