As the price of Bitcoin breaks through the $90,000 mark, the market reaction does not seem to be as enthusiastic as expected, especially for those participants who focus on the Bitcoin ecosystem. The reason behind this is closely related to Bitcoin's consensus mechanism. The Proof of Work (PoW) mechanism adopted by Bitcoin is based on block rewards, but as Bitcoin approaches its upper limit of 21 million coins, this reward mechanism is facing challenges. There are still more than one million Bitcoins that have not been mined. Although this is not a short-term problem, it has brought a certain sense of urgency to the market.
Problems
1. Mining rewards are decreasing: As Bitcoin approaches its maximum supply, the main source of income for miners will shift from block rewards to transaction fees. However, the demand for transaction fees on the Bitcoin chain is not high at this stage. If this trend continues, more mining farms may be closed in the future due to unprofitability, which will affect the security of the entire network.
2. Ecosystem construction lags behind: Compared with other blockchain platforms such as Ethereum, Bitcoin lags behind in ecosystem construction. In the past few cycles, Bitcoin mainly relied on capital consensus to drive price increases, lacking sufficient application and innovation support.
Solution
In order to deal with the above problems, it is particularly important to develop the Bitcoin ecosystem. This not only includes creating new application scenarios, but also requires building a more complete infrastructure to support the development of these scenarios. In recent years, some infrastructures based on the Bitcoin ecosystem have gradually emerged, among which @BounceBit is one of the new projects that has attracted much attention.
About BounceBit
BounceBit is a sidechain (L1) independent of the Bitcoin mainchain, with an independent economic system and security mechanism. It adopts the Proof of Stake (PoS) consensus model and introduces a dual-token structure by using BTC as one of the assets participating in the network security consensus. This design not only improves the capital efficiency of BTC, but also enhances the security of BounceBit itself. In addition, BounceBit also has a built-in liquidity staking module that allows users to earn additional income while maintaining staking.
Native Liquidity Staking
To better understand this, we can compare it to a similar concept on Ethereum. Since Ethereum transitioned from proof of work to proof of stake, the concept of liquidity staking and re-staking has gradually become an important part of the on-chain ecosystem. BounceBit borrows this concept and provides a liquidity liberation function, allowing holders to obtain more benefits while ensuring on-chain consensus.
BBCeDeFi Ecosystem
BounceBit's goal is to work around how to liberate BTC capital efficiency, that is, to obtain on-chain Alpha income by staking BTC and participating in the DeFi ecosystem. This is similar to the huge ecosystem built by Ethereum around ETH assets, which aims to provide BTC holders with more value-added opportunities. At the same time, BounceBit also cooperates with traditional financial institutions to form a unique BBCeDeFi ecosystem.
Token Economy Analysis
Initial distribution: When BounceBit was launched, the Megadrop share accounted for 8%, and the initial circulation was 19.5%. As of now, the circulation is about 22%.
Staking rewards: The bulk of the protocol allocation is used for staking rewards, accounting for 35%, and there is an ultra-long-term release plan, which will release less than half of the tokens until 2032. This is relatively mild for the secondary market.
Investor lock-up period: Investors have a four-year lock-up period, one of which is completely locked up, and then released linearly every year until all are released in 2028.
Trend Analysis
From the hourly K-line, $BB is currently at a resistance position. It is recommended to avoid blindly going long to prevent the risk of retracement. However, its trend has formed a W-bottom pattern, which has a positive effect on possible future pullbacks. The daily K-line cycle shows that BB has experienced a pullback before and rebounded at the Fibonacci 0.618 support level. It is still some distance away from the resistance level. The resistance target gives priority to the 0.35 position, because the 0.618 support rebound is not a strong bullish signal.
As the BTC sidechain L1, BounceBit shoulders the important task of liberating BTC capital efficiency and promoting the development of the Bitcoin ecosystem. Whether it can gain a foothold in the market and run the model smoothly will be the key to test its success.
