Will Bitcoin’s Liquidity Be Unlocked for The Next Billion Users?

Bitcoin has traditionally been associated with its store of value or digital gold narratives. This is however rapidly changing with the integration of BTC into decentralized finance (DeFi) products and the spur of growth in interoperability solutions for the asset. Currently, nearly $1 trillion in BTC value is lying in wallets as dormant capital, with partly $15 billion worth of daily transactions across the largest blockchain ecosystem today.

The dormant capital has the potential to become yield-generating (as witnessed across DeFi), benefiting the ecosystem at large. Bitcoin holders have the opportunity to generate revenue from their assets, as well as gain capital returns as the asset appreciates. However, for this to happen, suitable protocols need to be built and the capital activated suitably, ensuring security and decentralization are not impacted.

Not activating the billions in value is akin to placing bank notes under the bed and leaving them to gather dust. In the blockchain age, where value can be seamlessly and instantly transferred, the lack of unlocking Bitcoin’s potential liquidity is unjustifiable.

Luckily, several platforms are working on interoperable solutions, which could potentially unlock hundreds of billions worth of Bitcoins, allowing holders an opportunity to earn through liquidity provision, lending, borrowing, staking, and yield farming. One such platform, Zeus Network, combines the security of the Bitcoin mainchain with the speed, low-cost transfers and efficiency of the Solana blockchain to help unlock Bitcoin’s liquidity for the next billion users.

We discuss in detail the key elements that the Bitcoin blockchain lacks to unlock said liquidity and the solutions and infrastructure that Zeus Network offers to unlock the potential liquidity for the next wave of Bitcoin adoptees.

How Interoperability Challenges Hinder Unlocking Bitcoin’s Liquidity

One of the biggest factors impacting Bitcoin’s liquidity is the HODL culture brewing across the community. Bitcoin holders usually choose to buy and hold their assets in wallets rather than utilize the assets in other platforms – and for good reason. According to BitcoinInfoCharts, the cumulative sum of dormant Bitcoin addresses for at least one year stands at 17.3 million wallets , expressing the holding culture across the community. This is partly influenced by the slow transaction speeds and high fees on the Bitcoin blockchain, making it hard and unprofitable for people to use the blockchain for transactions.

However, the biggest influence of Bitcoin’s unlocked liquidity lies in the lack of interoperability solutions and silo mentality across its ecosystem. Interoperability, or its lack thereof, is one of the biggest challenges affecting Bitcoin’s liquidity transfer across other platforms. The lack of interoperability in the Bitcoin ecosystem has caused several issues, including:

• Reduced efficiency: The lack of communication and interaction with other blockchains limits the efficiency across the blockchain ecosystem. Transactions may be slower and more expensive, and determining the optimal asset price may take more work.
• Reduced liquidity: Interoperability issues also mean billions in Bitcoin’s liquidity is locked in its blockchain, hence DeFi protocols and other blockchains can only access a limited amount of assets.
• Reduced creativity and innovation: Unlike Ethereum or Solana, with DeFi, Bitcoin offers little to no innovative solutions in finance and no earning systems, meaning people have no incentive to use their assets for anything other than holding them in their non-custodial wallets.

Finally, Bitcoin offers the greatest security and returns (from launch) across the blockchain space, and holders may want to remain invested in the coin for longer periods, with the hope for massive capital gains.

Why Unlocking Bitcoin’s Liquidity Is Important

In reality, it’s impossible to have capital that is actively managed at all times, and so it is inevitable that there will be periods when money is lying idle. However, Bitcoin has a huge problem as billions worth of assets have remained idle, locked in wallets while they could be used in better yield-generating opportunities.

Unlocking this liquidity could offer holders better returns on their assets, increase the capabilities via loaning, yield farming and staking or offer additional reward opportunities. Additionally, unlocking Bitcoin’s liquidity could be the catalyst to borderless finance, with BTC assets enhancing overall remittances by lowering transaction fees and providing faster transaction times.

One such solution, Zeus Network is working to onboard the next billion users to Web3 by providing cross-chain solutions between Bitcoin and Solana. As stated before, interoperability is the main challenge in unlocking billions of dollars in value across Bitcoin’s ecosystem. Zeus Network seeks to build a cross-chain infrastructure by utilizing the world’s fastest, most affordable, and highest-performing blockchain, Solana. This is achieved by developing Zeus Layer, a pluggable and programmable network of nodes on the Solana Virtual Machine (SVM).

The platform allows developers to build DApps permissionlessly on top of a bridgeless cross-chain infrastructure, leveraging the security that Bitcoin provides and the efficiency of the Solana blockchain.

APOLLO , the first cross-chain DApp on Zeus Network, provides a permissionless wrapper for Bitcoin to Solana. The platform is designed to offer cross-chain interoperability without relying on conventional bridging mechanisms. It enhances the seamless transfer of liquidity between Bitcoin and Solana blockchains, reducing the overall transaction fees and minimizing the transaction times.

To ensure the principles of decentralization and trustlessness are maintained, APOLLO employs the Zeus Consensus, , a decentralized governance framework driven by Zeus verifiers. These verifiers, functioning as an independent consensus module, ensure the security and integrity of APOLLO’s operations.

Final Words

The issue of unlocking Bitcoin’s liquidity is rooted in the ideals of Bitcoin and the interoperability of the blockchain with other platforms. To ensure, the billions of dollars in Bitcoin value are unlocked, integrating cross-chain solutions should be the main focus for developers. While bridging has been suggested as a way to unlock this liquidity, the security concerns may be too grave for the Bitcoin community to accept it as a long-term solution.

By integrating robust cross-chain solutions, platforms like Zeus Network are paving the way for a new era of interoperability, enabling Bitcoin holders to generate yield and participate more actively in decentralized finance. As these innovative solutions mature, the vast dormant capital in Bitcoin could be mobilized, benefiting both individual holders and the overall financial landscape.