Original title: "Bitcoin L2 becomes the focus of the narrative, what other projects on Stacks are worth paying attention to?"
Original source: TechFlow
Cryptocurrency is currently in a bull market, and with many innovations around Bitcoin such as Ordinals/BRC-20, it is reasonable to be optimistic about the development of Bitcoin.
However, inscriptions and memes alone cannot change the current weak status of the Bitcoin ecosystem. If the Bitcoin ecosystem is to develop further, related liquidity, DeFi, and similar products commonly seen in other ecosystems also need to appear on a large scale.
Therefore, based on the current Bitcoin ecosystem, building a prosperous DeFi application layer has become another hot narrative and a new expectation for Bitcoin supporters.
Specifically in this field, Stacks, which is committed to building the Bitcoin second-layer network, is in a leading position.
According to DefiLlama data, Stacks' current TVL is $34.49M, which still has a lot of room for growth compared to Ethereum L2.
As the second layer of Bitcoin, Stacks is anchored on the Bitcoin blockchain, but it is also an independent protocol that introduces smart contract functions similar to Ethereum, opening up new possibilities for applications such as DeFi and NFT.
Therefore, new projects built on the Stack can make Bitcoin more than just a simple store of value.
As the market pays more attention to the Bitcoin ecosystem, especially the inscription system, we should also continue to examine whether new financial-related applications are also running on Stacks.
This article investigates the current popular projects on Stacks to provide the latest information reference for everyone's investment research and judgment.
Alex: Bitcoin DeFi Platform
Project Description
ALEX is a Bitcoin DeFi platform based on the Stacks blockchain, dedicated to activating the multiple uses of Bitcoin. ALEX mainly provides the following services: projects launch their tokens, fixed-rating and fixed-term lending without liquidation risk, AMM mechanism DEX (decentralized exchange), deposit tokens to earn interest and get high returns through yield farming.
ALEX aims to break down the barriers between Bitcoin Layer 1 (L1) and Layer 2 (L2) to provide a seamless Bitcoin DeFi experience.
Project Latest News:
On December 11, 2023, ALEX launched the Alpha version of the Bitcoin oracle, which is expected to be tested by the end of the first quarter of 2024. This version was developed in collaboration with partners such as Domo, BIS, Hiro, UniSat, Xverse, and Xlink. The oracle is designed to provide a critical layer of security and efficiency for assets on Bitcoin while maintaining decentralization and high transparency.
Project official website: https://app.alexlab.co/swap
Official Twitter: https://twitter.com/alexlabBTC
Alex Token
$ALEX is the participation token of the platform, providing protocol and platform governance benefits to governance participants who hold $ALEX. $ALEX is also a medium for incentivizing participants in platform activities (i.e. providing liquidity and staking on Alex's DEX). $ALEX can be obtained through DEX, LP participation and staking, and has three main functions:
Incentives: The primary use of $ALEX is as a medium to incentivize participants in platform activities (i.e. providing liquidity and staking on the DEX).
Staking: $ALEX can be locked to earn $ALEX as rewards. 50% of the initial token supply is allocated for staking, where $ALEX or liquidity tokens can be locked to earn $ALEX as rewards.
Voting: $ALEX holders have voting rights on, but are not limited to, the following aspects: future platform development, trading fee rebates for liquidity providers, reserve allocation policy, $ALEX token supply policy (including buybacks and additional issuance)
Token distribution: The total initial supply is 1,000,000,000 $ALEX. The foundation accounts for 20%, the community stakes for 50%, and the founding team and early investors account for 30%.
Currently, $ALEX has a market cap of $116M.
As the Stacks platform continues to advance and Bitcoin technology continues to evolve, it is expected that more projects will choose to launch on Stacks. In this process, the series of services provided by ALEX will become an important starting point for these projects. This service is not only highly forward-looking, but will also greatly promote the continued development of the ALEX platform.
StakingDAO: Improving capital efficiency for STX token stakers
Project Description
StackingDAO is a project that aims to improve capital efficiency for STX token stakers. The advantage of StackingDAO is that it allows stakers to simultaneously enjoy the benefits of staking rewards and using their assets in other DeFi applications without locking their assets in a staking contract.
Through StackingDAO, users put STX tokens into the protocol and receive stSTX in return, earning Bitcoin income in this way while also being able to use stSTX in other Stacks DeFi applications. Currently, the project is undergoing private testing on the testnet and undergoing code audits.
As of the time of writing, nearly 400 million $STX has been staked in StackingDAO, with an average annualized return of 7.65%.
Project official website: https://stackingdao.com/
Official Twitter: https://twitter.com/StakingDao
STK Token
StackingDAO will have a governance token, $STK, which will be earned by platform users through participating in the ecosystem and staking in the DAO.
The total supply of $STK tokens will be fixed at 150,000,000, and the token issuance will be limited to 5% of the total supply. The founding team of StackingDAO will each receive 1% of the total supply. The white paper has not yet disclosed a more detailed token distribution mechanism for the $STK token.
The functions of holding the governance token $STK are mainly governance, voting and staking rewards, and more detailed functions are not introduced.
The project token $STK is not listed yet. Please pay attention to the latest developments on the official website and Twitter.
Arkadiko Protocol: Decentralized Liquidity Protocol
Project Description
Arkadiko Protocol is a decentralized liquidity protocol based on the Stacks ecosystem. It allows users to mint Arkadiko's own stablecoin USDA using Stacks native token $STX as collateral. The focus of this project is to provide decentralized stablecoins for the Stacks ecosystem to enhance the liquidity and functionality of the ecosystem.
Compared with other DeFi protocols, Arkadiko is characterized by providing a dedicated stablecoin solution for the Stacks ecosystem and enabling users to obtain liquidity while maintaining asset exposure through the PoX consensus mechanism. Arkadiko's goal is to promote the development of USDA on the Bitcoin second-layer network and improve the liquidity of assets on the Stacks network.
Key features and functions:
Decentralized stablecoin $USDA: Users can mint USDA by pledging $STX. USDA can be used in the Arkadiko protocol, such as participating in Farm, repaying loans, etc.
Swap and lending: Arkadiko supports currency exchange (Swap) and lending services to increase the flexibility of user operations.
Staking and Yield: Users can earn deposit interest by staking assets, and can also earn additional income by participating in Stacks’ consensus mechanism PoX.
DEX (Decentralized Exchange): DEX built on Stacks provides trading services to users, increasing liquidity and ways for users to participate.
Governance Token DIKO: The DIKO token is used for the governance of the protocol. Holders can participate in the decision-making process and earn DIKO by adding assets to the liquidity pool.
Self-repaying loans: Users can borrow USDA by staking STX tokens, which can be staked in the PoX consensus mechanism to earn rewards that can be used to automatically repay USDA borrowings.
Project Latest News:
On October 27, 2023, we partnered with PythNetwork to implement their price oracle within Arkadiko.
On November 3, 2023, Arkadiko Protocol partnered with asigna, a non-custodial multi-signature wallet built for Bitcoin, Stacks, and Ordinals, and users can now use Arkadiko directly from asigna multi-signature.
Project website: https://arkadiko.finance/
Official Twitter: https://twitter.com/ArkadikoFinance
DIKO Token
$DIKO serves as the governance token of the Arkadiko protocol. The main functions are as follows:
Voting: DIKO holders can choose to stake their DIKO, converting their DIKO to stDIKO during the staking period. stDIKO provides voting weight and can be used to vote on governance proposals.
Incentives: By staking stDIKO to participate in the security module, users will be able to receive a fair share of the corresponding protocol rewards.
Token distribution: The total number of tokens is 100,000,000. The team accounts for 21%, strategic financing accounts for 12%, Arkadiko Foundation accounts for 17%, and the ecosystem reward pool accounts for 50%.
Currently, $DIKO has a market cap of $8M.
Velar Protocol: A DEX inspired by Uniswap
Project Description
Velar Protocol is a Bitcoin-based DeFi platform whose main goal is to unlock the liquidity locked on the Bitcoin network. The protocol is heavily inspired by Uniswap v2 and plans to introduce governance, cross-chain bridges, and perpetual derivatives exchanges in future updates.
Key features and functions:
Multi-faceted DeFi platform: Velar offers multiple functions including a decentralized exchange (DEX), a trading platform, and an initial coin offering (IDO) launchpad.
Dharma Mainnet: This is a major milestone for Velar, introducing the first automated liquidity protocol on Bitcoin, providing a seamless and efficient DeFi experience.
Innovation in Bitcoin DeFi: Velar aims to unlock over $500 billion in potential liquidity value in Bitcoin by enabling individuals to issue and trade tokens on the Bitcoin network while earning rewards for providing liquidity.
Velar is currently still in the testing phase. In the future, Velar plans to launch governance, a temporary DEX focused on liquidity, a perpetual derivatives exchange with up to 20x leverage, and a cross-chain bridge for moving assets between different L2 networks.
Project Latest News:
On June 14, 2023, Velar will be launched on the testnet. All testnet users from June 14 to July 14 will receive $VELAR airdrops.
On September 28, 2023, Velar integrated the xverseApp wallet (Bitcoin wallet) on web and mobile platforms
On December 7, 2023, the official Twitter account stated that the roadmap will be released next week. As of the time of writing, the roadmap has not yet been released, and readers can actively pay attention to it.
Project website: https://velar.co/
Official Twitter: https://twitter.com/VelarBTC
VELAR Token
The Velar token ($VELAR) is the core of the protocol economy. The token is used for:
Incentives: Provide rewards for liquidity providers
Wider ecosystem partnerships (e.g. discounts on third-party dApps)
Boosting IDO Allocation
Token distribution: The total supply of tokens has not been announced yet. Community rewards account for 35%, the treasury accounts for 20%, founders and team accounts for 20%, consultants account for 5%, investors account for 15%, and airdrops account for 5%.
The token $VELAR is not listed yet, but from June 14th to July 14th, all Velar testnet users will receive $VELAR airdrops, accounting for 5%.
Zest Protocol: Decentralized Lending Platform
Project Description
Zest Protocol is a decentralized lending platform based on Bitcoin that focuses on solving a key problem in the Bitcoin economy: the underutilization of Bitcoin. Often a large amount of Bitcoin is idle in cold storage, which hinders economic growth. As an on-chain open source lending platform built on the Bitcoin blockchain, Zest Protocol provides a solution by increasing transparency and auditability through smart contracts.
The protocol has two different pool types:
Yield Pools: Users can earn returns by depositing Bitcoin into these pools.
Borrowing pool: allows users to borrow and lend using the Bitcoin they hold.
This design allows Bitcoin holders to securely access liquidity without selling their assets, reducing reliance on centralized financial platforms (CeFi) or custodians.
Zest Protocol has been under development since June 2022 and has undergone multiple audits and testnet runs. It is scheduled to launch the mainnet in Q2 2024.
Project Latest News:
On October 10, 2023, Zest Protocol passed the second smart contract audit by LeastAuthority, which is sufficient to ensure that users can experience the highest level of security and reliability through the Zest Protocol
Project website: https://www.zestprotocol.com/
Official Twitter: https://twitter.com/ZestProtocol
At present, the project has not issued any coins, but the plan to launch the mainnet in Q2 2024 deserves further attention. Readers can follow the official Twitter and official website for further developments.
Uwu Protocol: A lending protocol based on its own stablecoin
Project Description
UWU is a lending protocol based on the UWU Cash stablecoin built on the Stacks chain, which mainly consists of two core parts: UWU Cash (UWU Cash) and UWU Shares (xUWU).
Key features and functions:
Lending mechanism: Users can deposit STX as collateral and borrow UWU Cash up to 66% of the value of their deposited STX. Currently, no interest is required and there is no fixed repayment date.
Stability: The UWU protocol maintains the stability of the UWU Cash stablecoin through liquidation and arbitrage mechanisms.
Risk: Since STX, the supporting asset of UWU Cash, is highly volatile, there is a risk that a rapid drop in price may lead to large-scale liquidation or stablecoin decoupling.
Unique Features: The UWU protocol attempts to introduce a stability module independent of the protocol, allowing users to convert UWU Cash into sUSDT at a low fee.
Currently, the UWU protocol is still in the testing phase and is seeking early users for testing.
Project Latest News:
On June 9, 2023, users can interact with the UWU protocol using the xverseApp mobile wallet.
On July 19, 2023, UWU launched a new historical analytics dashboard that allows users to easily explore past data and focus on key metrics related to the UWU Agreement.
On July 28, 2023, UWU Swap was launched, the first DEX aggregator on Stacks.
Project official website: https://uwu.cash/
Official Twitter: https://twitter.com/uwuprotocol/
Uwu Token
The UWU protocol issues two types of tokens:
UWU Cash
UWU Cash is an overcollateralized stablecoin issued by the protocol. It is priced at $1.00 in a "soft-pegged" manner and is backed by $1.50 worth of STX tokens, ensuring its stability and partial volatility resistance. This means that each UWU Cash is backed by at least $1.50 worth of STX collateral, maintaining a collateralization ratio of at least 150%.
UWU Share (xUWU)
UWU Share (xUWU) is a utility token in the protocol that is responsible for capturing and distributing 100% of the protocol's revenue to its holders. This distribution is achieved through a fee claim smart contract that allows holders to claim their fees each cycle. Unclaimed fees can be rolled over to the next cycle. This mechanism provides a way for holders to share in the revenue.
Token Distribution: The entire supply of xUWU tokens will be distributed to users of the UWU protocol. No tokens will be pre-allocated to any individual or entity, including core contributors.
At present, the project has not issued any coins, but the project is actively running the test network and developing new functions. Readers can actively follow the official Twitter and official website to learn about the follow-up developments.
Hermetica Finance: An options strategy protocol that increases the value of BTC
Project Description
Hermetica Finance is a BTC structured product designed to provide users with a new way to earn yield by offering a platform for users to participate in a variety of activities to earn, trade, and increase their Bitcoin holdings while maintaining non-custodial control over their digital assets.
Key features and functions:
European Reverse Knockout (ERKO) Option Strategy: The core appeal of Hermetica is the innovative strategy it employs. This strategy generates returns by setting specific price barriers, and profits are realized when the closing price of Bitcoin falls within these barriers.
Price Range: This strategy ensures profits if the price of Bitcoin fluctuates within a range of 1% to 20% above or below the predetermined execution price.
Non-custodial Structured Product Agreement: Hermetica Finance is a non-custodial structured product agreement for Bitcoin.
Capital Protection: The design emphasizes capital protection, limiting the maximum risk of each transaction to 1% per month, effectively managing downside risk.
Project Latest News:
On November 3, 2023, Hermetica released the testnet of the first non-custodial Earn product fully powered by Bitcoin.
On December 8, 2023, the Hermetica Leverage Bull vault was launched on the Hermetica testnet. This feature allows users to use BTC leverage without liquidation risk.
Project website: https://www.hermetica.fi/
Official Twitter: https://twitter.com/HermeticaFi
Hermetica Token
At present, the project has not issued any coins, but the project is actively running the test network and developing new functions. Readers can actively follow the official Twitter and official website to learn about the follow-up developments.
Bitflow Finance: A highly transparent DEX that aggregates BTC liquidity
Project Description
Bitflow Finance is a decentralized exchange (DEX) designed for Bitcoin enthusiasts. The main purpose of this platform is to centralize the liquidity and trading activities of the Bitcoin economy in one unified place while providing a secure and transparent environment.
Key features and functions:
Trading Bitcoin and Stablecoins: Bitflow supports trading Bitcoin and stablecoins from second-layer solutions on Bitcoin such as Stacks and Rootstock. This provides users with a decentralized way to trade BTC products like sBTC and xBTC.
No custody risk: The platform is designed to ensure that users do not need to bear custody risks during the transaction process.
Optimized Liquidity: Bitflow supports Bitcoin-based stablecoin trading and provides optimized liquidity, helping to reduce transaction slippage and fees.
Earn yield: Users can earn real yield by depositing Bitcoin and stablecoins. In addition, the platform allows unilateral provision of liquidity.
Open Source and Transparency: Bitflow is an open source project, including its smart contracts and front-end interface, which enhances the transparency of the platform and promotes community participation.
Replacing traditional middlemen: Bitflow uses PSBT (Partially Signed Bitcoin Transactions), atomic swaps, second-layer smart contracts, and decentralized liquidity pools to replace traditional middlemen.
Project website: https://www.bitflow.finance/
Official Twitter: https://twitter.com/Bitflow_Finance
Project Latest News:
On August 2, 2023, Bitflow Finance released a waiting list. Join the waiting list to try out the stable swap pool and earn Bitcoin income
sBTC swap is now live on Bitflow testnet on November 29, 2023
The project, which is backed by the Stacks Foundation and the Bitcoin Frontier Fund, is currently in its testing phase.
Bitflow Finance Token
At present, the project has not issued any coins, but the project is actively running the test network and developing new functions. Readers can actively follow the official Twitter and official website to learn about the follow-up developments.
In general, these projects on Stacks are trying to bring the three major DeFi components (stablecoins, lending, and DEX) on Ethereum and other public chain ecosystems into the Bitcoin ecosystem, making the entire Bitcoin ecosystem more usable.
We cannot predict whether Bitcoin itself should be used as a single value storage object, or whether it should move towards Ethereum and become a platform that supports more applications.
But at the moment, any new attempt in any direction is worthy of our attention. The market values the new rather than the old, and sometimes attempts that everyone thinks are "unnecessary" may eventually explode with huge potential.
Stacks is the current market leader in the Bitcoin Layer 2 space, and DeFi projects built within its ecosystem may also have such potential.
Exploring an ecosystem before it matures and becomes known to the public often yields greater rewards.
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