HTX Ventures丨BTCFi and CoreX: Pioneering the Future of Bitcoin DeFi

June 21, 2024 at 04:15 AM EDT

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Foreword

Singapore / June 21, 2024 – 2024 marks a year of breakthroughs for Bitcoin: BTC ETFs have received approvals from U.S. and Hong Kong regulators. Additionally, with the halving completed in May, Bitcoin is steadfastly moving toward grander goals. On the application side, we've seen ecosystem innovations introduced by Ordinals. Its increasing popularity has led to network congestion, bringing Bitcoin scalability back to the market's attention. Over the past few months, the market has seen a flourishing of Bitcoin Layer2 solutions and sidechains, with BTCFi regarded as a key sector with vast potential for growth.

In the early stages of BTCFi's development, we noticed Core, a public chain that addresses Layer1 network security, speed, and decentralization issues with innovative solutions. Its Satoshi Plus consensus mechanism leverages the Bitcoin network's security to deliver efficient transaction processing speed (TPS) while maintaining sufficient decentralization (for details on the Core Chain, see https://docs.coredao.org/core-white-paper-v1.0.7).

We believe that the Core Chain provides the best environment for developing BTCFi. As one of the Core Chain's earliest ecosystem partners, HTX has strategically invested in CoreX, a decentralized exchange (DEX) built on the blockchain. HTX views CoreX as the future gateway and liquidity hub of the CoreDAO ecosystem, which will offer a brand-new trading experience. This report walks through CoreX's design philosophy, features, and strengths. HTX believes that CoreX will become one of the most competitive DEXs in CoreDAO and, as a booster for the ecosystem, will act as the center of liquidity for CoreDAO users.

Why Are We Optimistic About BTCFi?

Bitcoin decentralized finance, or Bitcoin DeFi, or BTCFi, means introducing decentralized financial functions into the Bitcoin ecosystem. Bitcoin has long been the blockchain network with the most robust consensus and security. However, due to its lack of smart contract capabilities, Bitcoin cannot host decentralized applications (dApps) like Ethereum or other public chains and is mostly used for "HODLing." For Bitcoin holders, experiences like on-chain lending, decentralized trading, and futures trading have largely been missing.

In early 2024, Ordinals and Runes explored new use cases for the Bitcoin ecosystem, demonstrating the market's interest in Bitcoin's general-purpose functionalities. However, we believe that Bitcoin's potential in DeFi is still waiting to be unlocked. Currently, the total value locked (TVL) in BTCFi is close to $1.2 billion, accounting for only 0.09% of Bitcoin's total market cap. By contrast, mainstream public chains with smart contract capabilities have much higher TVL-to-market cap ratios: 14% for Ethereum, 6% for Solana, and approximately 3% for Ton. Even at a 1% ratio, BTCFi has the potential for tenfold growth.

Image 1: Comparison of TVL-to-Market Cap Ratios and Market Caps

We believe BTCFi not only unleashes significant value for Bitcoin but also creates new income-generating opportunities for BTC holders. Through BTCFi, holders can do more than just "HODLing"; they can fully utilize their BTC by staking, lending, and market making, among other means. As BTCFi protocols evolve, they are expected to compete with, and even outperform, existing public chains, fostering a more diverse and robust DeFi ecosystem.

The Rise of CoreDAO

There are many solutions for expanding Bitcoin's functionality. Core, a Bitcoin-powered, EVM-compatible Layer1 public chain, stands out as a trailblazing approach.

Core ensures its security through a consensus mechanism called Satoshi Plus, which combines Delegated Proof of Work (DPoW), Delegated Proof of Stake (DPoS), and non-custodial Bitcoin staking. First, DPoW leverages the security of Bitcoin's PoW, allowing miners to delegate their hash power to Core nodes while providing hash power to the Bitcoin network, thus ensuring consensus security for the Core Chain. Currently, 46% of Bitcoin nodes are delegated to the Core Chain, providing 259 EH/s of hash power. Additionally, Core's security is bolstered by the CORE tokens and Bitcoin delegated within its network, with nearly 125 million CORE and 3,000 BTC staked. This hybrid consensus model of POW and DPOS guarantees network security while enabling fast transaction processing.

Core's design of non-custodial staking is another groundbreaking innovation. By eliminating the need to trust centralized custodians, Core allows BTC holders to participate in its consensus and earn staking rewards without losing control of their assets. This significantly lowers the barrier for BTC holders to engage in staking while enhancing Core's security. BTC holders do not need to bridge their assets cross-chain or convert them into wrapped assets like WBTC. This fully non-custodial mechanism can potentially attract massive BTC holders to participate in building the Core network's consensus.

Looking toward CoreDAO's future, we believe that DeFi will be a key focus area for the Core ecosystem. Bitcoin users will be able to engage in lending, futures trading, and other protocols while retaining their BTC holdings. Innovations may include using Bitcoin as collateral for opening positions and using Bitcoin for liquidity rewards or staking liquidation. Additionally, on top of staking rewards, liquid staking mechanisms are poised to emerge.

What Is CoreX?

CoreX, the flagship DEX within the CoreDAO ecosystem, provides users with an outstanding trading environment through its simple yet smart design and comprehensive toolkits. By utilizing the Uni V3 infrastructure, CoreX addresses key challenges such as liquidity shortages and slippage. Additionally, it integrates AI technology to create a vibrant social trading hub.

How Will CoreX Create New Trading Experiences?

CoreX brings new trading experience to users through its optimized user experience, social features, and AI technology. It aims to lower the barriers for new users, enabling them to easily enter the DeFi space.

CoreX significantly enhances the traditional DEX experience by offering a user-friendly trading environment. The platform provides advanced real-time charting tools that allow traders to track price fluctuations of selected tokens. It also integrates technical indicators and drawing tools for deeper analysis. These features are particularly helpful and user-friendly for traders who wish to share their insights on social media. Moreover, detailed information about each trade, including realized profits or losses, is displayed on the trading interface, making important data easy to understand and access. Looking ahead, CoreX plans to introduce customization options that allow traders to tailor their trading environment using an intuitive drag-and-drop interface to meet their specific needs.

CoreX also elevates social trading to a new level. It offers global chat rooms and coin-specific chat rooms where traders can exchange ideas and share trading opportunities with each other. Loyal users are given access to 1-on-1 encrypted messaging and the privilege to create private chat rooms. Additionally, CoreX integrates social elements into its operations, including offering high returns through staking programs and hosting exclusive online and offline events to recognize and reward NFT holders. The platform will soon launch a massive social airdrop event that offers up to 10 million tokens, which has garnered much attention.

Moreover, CoreX provides a smart trading assistant that uses machine learning algorithms to recommend trading opportunities based on individual preferences, technical analysis, and social media sentiment. It also offers a one-click copy trading feature, allowing users to easily follow the strategies of successful traders. Furthermore, by partnering with algorithmic trading companies, the platform enables precise price predictions, helping users excel in the competitive trading environment.

HTX Ventures' Strategic Investment in CoreX

Crypto traders are always looking for platforms that offer consistent returns and high-quality trading experiences. CoreX prioritizes user experience and uses social and AI technologies to provide a superior and smart trading environment. This makes it an attractive focus for us. We believe that CoreX's emergence will take CoreDAO's DeFi development to the next level. Moving forward, we will remain committed to the CoreDAO ecosystem, leveraging our resources and strengths to drive its growth.

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About HTX Ventures:

HTX Ventures, the global investment division of HTX, integrates investment, incubation, and research to identify the best and brightest teams worldwide. With a decade-long history as an industry pioneer, HTX Ventures excels at identifying cutting-edge technologies and emerging business models within the sector. To foster growth within the blockchain ecosystem, we provide comprehensive support to projects, including financing, resources, and strategic advice.

HTX Ventures currently backs over 300 projects spanning multiple blockchain sectors, with select high-quality initiatives already trading on the HTX exchange. Furthermore, as one of the most active Fund of Funds (FOF) investors, HTX Ventures collaboratively forges the blockchain ecosystem alongside premier global blockchain funds, including Dragonfly, Bankless, Gitcoin, Figment, and Animoca. Visit us here.

Contact Details

Michael Wang

glo-media@htx-inc.com

Company Website

https://www.htx.com/en-us/ventures

About HTX Ventures

HTX Ventures, the global investment division of HTX, integrates investment, incubation, and research to identify the best and brightest teams worldwide.

With a decade-long history as an industry pioneer, HTX Ventures excels at identifying cutting-edge technologies and emerging business models within the sector. To foster growth within the blockchain ecosystem, we provide comprehensive support to projects, including financing, resources, and strategic advice.

HTX Ventures presently backs over 200 projects spanning multiple blockchain sectors, with select high-quality initiatives already trading on the HTX exchange. Furthermore, as one of the most vigorous Fund of Funds (FOF) investors, HTX Ventures collaboratively forges the blockchain ecosystem alongside premier global blockchain funds, including IVC, Shima, and Animoca.