As the market value of Bitcoin continues to hit new highs, many Bitcoin holders and institutions have gradually shifted their attention to how to improve the financial attributes of Bitcoin: If you have idle BTC, how to maximize its benefits? How to increase the passive income of Bitcoin?
On April 18, Binance announced the official launch of the first project of its new token issuance platform Megadrop: BounceBit (BB).
BounceBit was created to solve the problem of BTC's lack of passive income: the first native BTC staking chain allows users to stake idle BTC and earn income at the same time.
So what is BounceBit(BB)? What are the highlights of this project? Let’s find out~
1. What is BounceBit (BB)?
BTC, as the core asset of the crypto world, has little to show for its financial application attributes. This has become the direction and goal of innovation for many BTC builders.
BounceBit is a re-staking project built on the Bitcoin ecosystem. Its goal is to enable BTC to generate organic staking rewards by creating a new ecosystem: BounceBit Chain.
BounceBit's core innovation comes from the BTC re-pledge mechanism, and this new concept is the key to driving the project. BounceBit will build a series of infrastructures such as side chains, oracles, bridges, virtual machines, data availability layers, etc., explore the use of re-pledge on various types of Bitcoin, and support the entire framework through re-pledge and aggregated shared security.
BounceBit chose to introduce a hybrid PoS mechanism in the consensus layer and introduced a dual token staking model (Bitcoin and BounceBit native tokens) to ensure network security. At the same time, BounceBit's execution layer will achieve EVM compatibility to accelerate the migration of existing DeFi liquidity to the Bitcoin ecosystem.
In addition, BounceBit has introduced an innovative BTC mirroring mechanism, allowing Bitcoin holders to earn income through PoS and DeFi on the chain and through CeFi off the chain.
2. What are the highlights of BounceBit (BB)?
One of BounceBit's core innovations is its BTC re-staking mechanism. Users can convert their Bitcoin into BBTC and then stake it on the BounceBit platform to earn rewards. This mechanism not only improves Bitcoin's liquidity, but also increases its application in the DeFi ecosystem.
Here’s how it works:
Users first deposit BTC to Binance, then withdraw BTCB to the BNB chain and deposit BTCB to Ceffu (Binance Custody) through the bouncebit website. Users who deposit more than 1 BTC can also choose to manage their assets by selecting a trading team that executes a delta-neutral arbitrage strategy. In addition, users will also receive BTCB LSD, also known as BounceBTC, which can be staked to a validator node along with BounceBit tokens to earn BTC income.
One of the biggest criticisms of the staking track is: where does the income come from? BounceBit’s official documentation explains it this way:
CeFi rewards through Mainnet Digital and CEFFU’s custodial custody and various asset management services;
Node operation rewards provided through staking and PoS mining;
DeFi revenue from BounceBit ecosystem applications.
Currently, users can deposit funds through both Ethereum and BNB Chain. On the Ethereum network, supported tokens include WBTC, Auction, Mubi, and DAII. BNB Chain only supports BTCB tokens. All deposited funds will be available for withdrawal when the BounceBit mainnet goes live in May 2024.
3. Dual-token consensus mechanism and DeFi & CeFi integration
BounceBit's dual-token system not only provides diversified economic incentives, but also maintains the security and stability of the network through a unique dual-token consensus mechanism. Under this mechanism:
Validators need to stake BB or BBTC to participate in the network’s consensus process. This dual-token design enhances the security of the network because it requires participants to hold at least one of the two tokens, thereby increasing the economic cost of attacks on the network.
At the same time, BounceBit's DeFi (decentralized finance) and CeFi (centralized finance) integration is one of the core features of the platform, committed to building a bridge that seamlessly combines the traditional financial world with blockchain technology. This integration not only provides users with a wider range of financial tools and service options, but also enhances the liquidity and accessibility of funds.
IV. Founding Team and Investment
Most of the BounceBit team remain anonymous. The project's founder is named Jack Lu. BounceBit currently has 15 employees and plans to hire more.
Binance Labs’ latest investment has helped BounceBit gain high attention from the community. Although the amount of funding was not disclosed, Binance Labs said it will support the project to expand the functionality of Bitcoin and traditional value storage.
At the end of February, BounceBit successfully raised $6 million led by Blockchain Capital and Breyer Capital. Some notable seed round investors include CMS Holdings, Bankless Ventures, NGC Ventures, Matrixport Ventures, DeFiance Capital, OKX Ventures, and HTX Ventures.
Lead angel investors in the project include Anchorage Digital co-founder and CEO Nathan McCauley, EigenLayer strategy director Calvin Liu, and Brevan Howard portfolio director Ashwin Ayappan.
5. Token Economics
BounceBit's dual-token system is a key design feature that allows the platform to effectively enhance network security, provide a flexible staking mechanism, and promote user participation in its governance structure. This system includes two tokens with different functions: BB and BBTC.
BB is the native governance token of BounceBit, and its main uses are as follows:
Network governance: BB token holders can participate in the governance decisions of the platform, including proposals and voting. This governance model enables community members to directly influence the development direction of the platform and the adjustment of key parameters.
Staking Rewards: BB tokens can be staked in the network to support its operation, and stakers can receive transaction fees and other incentives in return.
Security: By staking BB tokens, users help maintain the security of the network and prevent double spending and other types of attacks.
BB tokens are designed to incentivize holders to actively participate in the maintenance and governance of the platform, thereby ensuring the healthy development and long-term success of the network.
In terms of token supply, the total supply of BounceBit tokens is 21 billion, and the distribution is as follows:
Staking Rewards: 35%, used to reward users who provide staking services for the BounceBit network.
Market: 3%, used to incentivize liquidity providers to provide liquidity for BounceBit trading pairs.
Binance Megadrop: 8%, for airdropping BB tokens to the public via Binance Launchpad.
Testnet incentives: 4%, used to reward testnet participants.
Advisors: 5%, used to reward advisors of the BounceBit project.
Team: 10%, used to reward team members of the BounceBit project.
BounceClub and Ecosystem Reserve: 14%, used to support the development and growth of the BounceBit ecosystem.
Investors: 21%, used to reward early investors.
BounceBit tokens will be unlocked gradually over four years, with the following schedule:
The other token, BBTC, is a token pegged to the value of Bitcoin and is mainly used to achieve wider application of Bitcoin on the BounceBit platform. Its main features and uses include:
Increase Bitcoin liquidity and usability: Users can convert their Bitcoin into BBTC and then use it on the BounceBit platform to participate in various staking and investment opportunities, such as DeFi projects.
Cross-chain function: BBTC can be freely transferred between different blockchains, allowing Bitcoin to circulate and be used in a wider blockchain ecosystem.
Participate in staking and earn income: By converting Bitcoin to BBTC, users not only maintain the value of Bitcoin, but also earn additional income by staking BBTC.
BBTC is designed to solve the problem of low liquidity and fewer application scenarios of Bitcoin on the native chain. Through BBTC, Bitcoin can participate in various blockchain activities more flexibly.
VI. Conclusion
BounceBit introduced the concept of LSD (Liquid Staking Derivatives), allowing users to maintain the liquidity of assets while participating in staking and supporting network security. BounceBit's cross-chain technology allows Bitcoin and other cryptocurrencies to flow freely between different blockchain platforms.
By being compatible with the Ethereum Virtual Machine (EVM), BounceBit is able to support a wide range of smart contracts and decentralized applications (DApps), which enables the platform to attract a large number of existing Ethereum developers and projects. On the other hand, by adopting a dual-token system and a Proof of Stake (PoS) consensus mechanism, this not only improves the security of the network, but also enhances the network's anti-censorship and decentralized characteristics by decentralizing power. BounceBit's platform combines the advantages of decentralized and centralized finance to provide an ecosystem covering a wide range of financial services. By introducing multiple innovative concepts and technologies, BounceBit has achieved a major leap in the integration of traditional financial concepts with cutting-edge blockchain technology. By incorporating Bitcoin into its PoS network and providing innovative staking solutions, BounceBit has not only increased the practicality of BTC, but also set new standards for the token economy. As the platform continues to develop, it is expected to become the cornerstone of the next generation of blockchain infrastructure, providing users, holders, and validators with a stable, secure, and scalable environment to grow their digital assets.
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