Given the recent fragility of the diversified financial sector (DeFi), Bitcoin (BTC) pioneer and MicroStrategy CEO Michael Saylor believes that Bitcoin and the Lightning network can save the DeFi market.
With two enormous protocols, Terra and Celcius, facing acute difficulties within a month of each other, the DeFi sector is going through a difficult time. And in a recent tweet, Saylor suggested that Bitcoin and Lightning could help stabilize the industry.
According to Saylor, Bitcoin provides “a sound ethical, economic and technological foundation for DeFi.” He went on to say that Lightning protocols and BTC tokens will be used to build the next generation of DeFi.
– Michael Saylor⚡️ (@saylor) June 14, 2022
Saylor was responding to a Bloomberg report on Tuesday, pointing out a number of key issues in the DeFi field. Mahin Gupta, founder of Liminal, a digital asset management system, told Bloomberg that:
“What is happening with Celsius will have serious consequences for the industry. This is not an insignificant player and his obvious failure will have a knock-on effect. “
Celsius Networks has closed off audits and other trading on its site almost a month after the massive collapse of the Terra blockchain, which lured investors with an annual return of around 20%. The collapse of Terra, which erupted when its stablecoin lost a 1-on-1 connection to the US dollar, and the suspension of withdrawals on Celsius have added to the loss of cryptocurrencies.
As a result, the CEO of MicroStrategy has been very interested in Lightning Network, the Layer 2 sizing solution for Bitcoin. According to to Saylor, Bitcoin is the future of money and the Lightning protocol will help with trading flexibility. He added that:
“If you want to make payments and trades at high speed, you need a foundation that is morally sound, economically and technically sound,” he said. “That’s what Bitcoin is. But then billions and billions of transactions will go to track 2 like Lightning. “
To date, DeFi apps on the Bitcoin network have not gained the same popularity as they have on other blockchains such as Ethereum (ETH) and Solana (SOL). However, some people who have studied DeFi believe that it can be implemented sustainably on the Lightning Network, to say “Stablecoins and fully secured loans against your BTC have merit.”
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According to the nonfungible token (NFT) project ‘the littles’ creator Wil Lee, BTC and LN can provide DeFi and NFTs energy boost. He told the Cointelegraph that although various new protocols are still in the experimental stage, protocols such as BTC and LN already show their inherent strength, adding that:
“For anyone who wants to get into cryptography, stability is something they want to be sure of. When I know there is an accepted protocol in the picture, I have peace of mind, which gives strength to the whole crypto ecosystem as well. Support from none other than BTC, DeFi or Your NFT project will definitely have much more take.
According to Ignite’s Aliasgar Merchant, DeFi is in a “struggle” and everyone is doing everything they can to get through the cryptic winter. He highlighted the recent events on Terra and Celius as proof that DeFi, which is meant to be the core of Web3, is failing. According to Merchant, the two most important factors in developing a reliable DeFi system are interoperability and flexibility. He added that “once the foundation is in place, we can begin to focus more on ethics to meet our DeFi needs.”
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