Stablecoins: The biggest variable in the Bitcoin ecosystem

The current $126B stablecoin does not run on the Bitcoin network and Taproot Assets will change this.

I have participated in many Bitcoin Layer 2 panels recently, and everyone is discussing how to move Ethereum’s smart contracts and ecological projects to Bitcoin. My idea is a little different — the success of Ethereum has its specific environment, community, and opportunities. History will not simply repeat itself. In my opinion, the first round of explosions of the Bitcoin Taproot Assets protocol will most likely occur in the stablecoin field.

Bitcoinizing the U.S. Dollar

Lightning Labs launched Taproot Assets with the goal of “Bitcoinizing” the U.S. dollar. As Stark, the founder of Lightning Network, said:

Taro helps Bitcoin in numerous ways, including onboarding people to Bitcoin through fiat where they can easily swap between assets. This is particularly useful in a high-inflation environment, as many people around the world live in economies where their currencies are continually losing value. Thus, Taro helps facilitate fiat to Bitcoin rails. Further, as Taro uses bitcoin liquidity to route assets issued on the protocol, there will be greater demand for bitcoin on the Lightning Network. As a result, bitcoin will route dollars, fiat, and everything in between. This is how we bitcoinize the dollar.

In many third-world countries, a silent revolution has begun. El Salvador, Mozambique, Brazil, Nigeria, Senegal, and other African and Latin American countries have begun to use the Bitcoin Lightning Network. The financial systems of these countries are not yet covered by banks, resulting in the widespread acceptance of Lightning Network payments.

Due to the frequent price fluctuations of Bitcoin, the need to build stablecoins on the Bitcoin Lightning Network is becoming increasingly urgent.

The stablecoin of the Lightning Network will not only satisfy real payment scenarios, but its arrival will also provide new opportunities and convenience for crypto asset transactions.

Polymorphic Stablecoin

As a key part of the ecosystem, stablecoins are constantly competing among projects. Not long ago, the market value of USDT broke through the historical high, reaching $87.5B, occupying 69.33% of the market share of the stablecoin ecosystem. Now that Bitcoin has entered the “multi-asset era”, as a giant that has accounted for more than 50% of the cryptocurrency market for many years, the business of issuing stablecoins on the Bitcoin network will become a new yet familiar battleground.

Today, TRON occupies nearly half of USDT’s market share, and the development of stablecoins on the Bitcoin network is bound to cause a great migration of the share of stablecoins in the cryptocurrency world.

Most people easily equate stablecoins based on the Lightning Network to USDC, USDT, and TUSD. However, in my opinion, this is a trend that has not yet been realized. On the new starting line of Lightning Network Taproot, any institution can issue Stablecoin. Whether the solution will come from synthetic assets, algorithmic stablecoins, over-collateralized stablecoins or 1:1 mapped stablecoins is still unknown.

UXUY focuses on stablecoin opportunities

The current opportunity comes from being deeply involved in the Lightning Network community, comprehensively tracking all stablecoin solutions, and actively assisting or participating in the establishment of stablecoin standards. UXUY exclusively created uPool to serve multi-chain pipelines, the core of which is to allow stablecoins to play a more active role in cross-chain transactions. We are also willing to use this groundbreaking solution to serve the Lightning Network and other Bitcoin Layer 2.

As of November 17, 2023, the Bitcoin Lightning Network has a capacity of 5,362.12 BTC worth $0.19 B. UXUY predicts that with Taproot Assets officially launching the Lightning Network, the scale of stablecoins will soon exceed this number, which will drive the capacity of the Bitcoin Lightning Network to continue to increase. We even imagined that the Defi Summer of Ethereum in 2020 would be repeated on Bitcoin.

Taproot Assets and Emerging Assets

The listing of Taproot Assets on Bitcoin has greatly consolidated Bitcoin’s status as the Internet’s native digital currency and value transfer protocol and brought richer application scenarios to the Bitcoin network. Relying on the natural advantages of Bitcoin’s decentralization, the encryption market has continued to expand. Transfer to DEX.

In addition, since the Taproot Assets protocol is compatible with Bitcoin development tools, it will be more convenient for project developers to create emerging assets by issuing them on the Bitcoin network. For traders, due to the rich liquidity of Bitcoin, it is more convenient to capture valuable projects with great potential for innovation and development with the help of the Lightning Network’s high security, low transaction costs, and extremely fast transaction characteristics.

I strongly feel that the Bitcoin ecosystem will usher in a new round of growth, and the Bitcoin network has officially entered the multi-asset era.

What is UXUY doing?

As the next generation decentralized multi-chain trading platform, UXUY is fully betting on the Bitcoin ecosystem: fully integrating into Bitcoin Lightning Network nodes, becoming the world’s first DEX to implement Lightning Network nodes; announcing full access to Bitcoin Taproot Assets; officially launching the universe service for developers; released the lightning address service, becoming the world’s first DEX to support lightning addresses…UXUY is fully prepared for Taproot Assets to be launched on the lightning network.

We observed the Muun wallet, which utilizes both Bitcoin and the Lightning Network to process transactions. Unfortunately, users are charged high fees. When Mempool is congested, Muun’s extremely high transaction costs will be borne by users.

UXUY is actively exploring, and leveraging the advantages of Ethereum and BNB Chain, to use more efficient and low-cost solutions to make transactions based on the Lightning Network and future Taproot Assets more convenient.

As Satoshi Nakamoto imagined when he wrote the white paper fifteen years ago, Bitcoin is a peer-to-peer cash transaction system. The widespread adoption of stablecoins on Bitcoin will push Bitcoin back to the original intentions of Satoshi Nakamoto.

There is currently $126B in stablecoin market size, and it does not run on Bitcoin at all. Five years later, let us look back at this data, and we will get a brand new answer. This is the biggest variable in the Bitcoin ecosystem in the next five years.

This is a challenge for UXUY, but also an opportunity for UXUY.

Author: Kevin, Founder of UXUY