Welcome to BitcoinFi Weekly, where we cover where people use their BTC and what is changing in the Bitcoin world. This week, we're diving into exciting proposals, infrastructure developments, and the ever-entertaining world of BTC assets.

Here’s this week’s rundown:

🏛️ tBTC Proposed for GMX Markets

🔗 TON's Bitcoin Bridge

💸 Hermetica’s USDh

🐱 Quantum Cats are back, baby!

🧙‍♂️ StarkWare pulls a ZK-proof out of Bitcoin's hat

🗳️ Bitcoin is for everyone

Let’s get into it.

Updates in BitcoinFi

tBTC Proposed for GMX

GMX, a leading perp DEX, is evaluating the addition of tBTC to its platform. The proposal suggests creating a BTC-USD market backed by tBTC to enhance decentralization and reduce risks associated with centralized wrapped Bitcoin options. The exchange is currently sitting on a whopping 123M USD of WBTC supplied as collateral in GM pools, and tBTC integration would mean increased decentralization and trust minimization in the GMX ecosystem, direct BTC on and off-ramps via tBTC SDK, and a slew of co-incentives to boost BTC TVL.  Threshold Network, the DAO overseeing tBTC, has committed to a three-month incentive program to bootstrap tBTC collateral deposits on GMX. This includes monthly allocations of $15,000 in $T tokens and approximately 6,666 ARB tokens.

TON's Bitcoin Bridge

TON (The Open Network) Foundation has launched TON Teleport BTC, a federated bridge enabling Bitcoin transfers to and from TON ecosystem. This is an exciting development as TON has seen a significant increase in users, largely driven by Telegram-based mini-games, hitting 470,000 active addresses as of mid-July.  By enabling the transfer of BTC between the Bitcoin blockchain and TON, TON Teleport BTC empowers users to leverage the security and decentralization of Bitcoin while enjoying the speed and scalability of The Open Network. The integration of TON Teleport BTC opens the door for BitcoinFi on TON, but the real test will be in its adoption, security, and ability to withstand the inevitable scrutiny.

source: https://www.tonstat.com/

USDh: High-Yield Bitcoin-Backed Dollar

Hermetica has launched USDh, a Bitcoin-backed synthetic dollar offering up to 25% APY. Unlike traditional stablecoins pegged to fiat currencies, USDh is composed entirely of Bitcoin. USDh tracks the USD price through a combination of Bitcoin holdings and a short futures position, offering users a unique opportunity to earn yield while maintaining exposure to Bitcoin.

I know that yield percentage sounds too good to be true, harkening back to a time we’d like to put behind us. So, let’s take a high-level peek under the hood.

The USDh ecosystem consists of two tokens: USDh, the synthetic dollar, and sUSDh, a yield-bearing token obtained by staking USDh.

sUSDh is a Bitcoin native bond that generates up to 25% yield from funding rates. Upon being issued on Bitcoin via Runes protocol and Bitcoin L2s (Stacks), USDh will be available to buy on Magic Eden and Alex.

Quantum Cats Recover, Handing Out Golden Capes like Oprah

Quantum Cats and their Golden Capes are the talk of the town, proving that in crypto, cats have way more than nine lives. Celebrations around CatVM and OP_CAT's activation on Bitcoin’s signet test network are in full swing, with multiple Golden Capes awarded for future Taproot Wizard redemptions.

But wait, there's more! CatVM, the foundation for CAT-powered Bitcoin applications, represents a potential paradigm shift in approaching off-chain computation for Bitcoin. Traditionally, off-chain computation for Bitcoin has relied on pre-signed transactions, which often require trusted signers or participants and can be capital-inefficient for operators.CatVM aims to break this model by leveraging the covenant functionality provided by OP_CAT. This opcode enables Bitcoin Script to simulate finite state machines, allowing for more complex, programmable transactions. CatVM can potentially equip BTC with arbitrary computation via a permissionless optimistic withdrawal path!

Infrastructure Updates

StarkWare Verifies ZK-Proof Using OP_CAT on Signet

StarkWare has successfully verified its first zero-knowledge (ZK) proof using its new STARK verifier on the Bitcoin Signet network. This achievement represents a culmination of three months of rigorous exploration into OP_CAT. Let’s take a closer look.

Based on StarkWare's open-source Stwo prover and adapted for Bitcoin's SHA256 hash function, the STARK verifier script is a crucial building block for a potential Bitcoin L2. This solution would leverage a combination of STARK proofs and CAT covenants to enable efficient and trustless verification of complex computations on the Bitcoin network.

Traditional CAT covenants store Layer 2 state on-chain and split STARK verification into multiple transactions, enhancing efficiency and preventing the script from monopolizing block space. Unlike existing scaling solutions, STARK-proof verification does not rely on equivocation or liveness. The proof fully validates computational integrity, ensuring result validity without interactivity or a node running 24/7/365. This approach promises a cost-effective and scalable solution, particularly for verifying Merkle paths and ensuring the integrity of each computational step.

While it's still in its early days, the significant increase in Bitcoin’s transaction speed and cost reduction brought by StarkWare's work is undeniable. If successful, this could usher in a new era of scalability for Bitcoin.

Lightning Network → Stablecoins?

Lightning Network announced on Tuesday that it had the first mainnet release of multi-asset Lightning. Enabling Taproot Assets on Lightning means users can send arbitrary assets on Lightning Network. This means stablecoins and probably some memecoins because why not.

Ethereum has routinely processed ~$400B in stablecoin volume per month this year. The market exists, and it’s time for it to come to Bitcoin.

While it won’t be long before we start seeing “SATOSHI69INU” traded via the Taproot Assets Protocol on Lightning, the benefit of extremely low-cost non-BTC transfers on the network will be significant. This will only help push Bitcoin further into adoption.

Although a select group of laser eyes might be unimpressed with non-BTC-denominated payments, the truth is that the growth of Bitcoin financial rails is categorically beneficial for Bitcoin as an asset and an idea. To grow Bitcoin in the coming years, we need Bitcoin-first financial rails. These rails are the foundational systems and protocols that enable Bitcoin-based (what does not always mean BTC-denominated) financial transactions, savings, and investments for the future.

Closing Thoughts

Bitcoin is for Everyone

A recent survey by The Nakamoto Project debunked a common misconception about Bitcoin ownership. Contrary to expectations, Bitcoin isn't just for libertarians or the political right. The survey found that Bitcoin owners are surprisingly diverse, representing various political ideologies. This revelation is significant because it underscores Bitcoin's universal appeal. It's a reminder that Bitcoin is not a speculative asset but a technology with the potential to empower individuals from all walks of life.

From tBTC proposals and TON bridges to high-yield synthetic dollars and ZK-proofs on Bitcoin, BitcoinFi is buzzing with exhilarating and revitalizing energy.

Thank you for tuning in to this week’s BitcoinFi Weekly. See you next week.

If there's a topic you’d like us to cover or have questions, reach out at [email protected].

Learn more about Thesis and our Full Bitcoin Stack at the following channels:

👾 Discord: https://discord.mezo.org & https://discord.com/invite/acre

🕊 X: https://x.com/thesis_co

🖥 Website: https://thesis.co/

🏦 Deposit Portal: https://mezo.org/hodl & https://stake.acre.fi/