In light of the recent fragility in the decentralized finance (DeFi) sector, bitcoin (BTC) maximalist and Microstrategy CEO Michael Sayer believes that bitcoin and the Lightning Network may come to the rescue of the DeFi market.
With the two big protocols, Terra and Celcius, facing acute difficulties within a month of each other, the DeFi sector is going through a tough time. And in a recent tweet, Sayer suggested that Bitcoin and Lightning could help stabilize the industry.
According to Sayer, bitcoin provides “a sound ethical, economic and technical basis for DeFi”. He further added that the Lightning Protocol and BTC tokens will be used to build the next generation of DeFi.
Sailor was responding to a Bloomberg story on Tuesday that highlighted several key concerns in the DeFi sector. Mahin Gupta, founder of digital-asset custody platform Liminal, told Bloomberg that:
“What is happening with Celcius will have serious ramifications for the industry. It’s not an insignificant player, and its apparent failure will have ripple effects.”
A month after the spectacular collapse of the Terra blockchain, Celsius Network has ceased withdrawals and other transactions on its platform, wooing investors with annualized returns of around 20%. The collapse of Terra, which began when its stablecoin lost 1 to 1 peg to the US dollar, and the halving of Celsius withdrawals have added to the cryptocurrency’s losses.
As a result, the CEO of MicroStrategy is very excited about the Lightning Network, a Layer 2 scaling solution for bitcoin. according For Sailor, bitcoin is the future of money and the Lightning Protocol will aid in the scalability of transactions. They said that:
“If you are going to make payments and transactions at a high speed, you will need a base layer that is ethically sound, financially sound and technically sound,” he said. “That’s what bitcoin is. But then there’s going to be billions and billions of transactions on a layer 2 like Lightning.”
To date, the DeFi app has not gained as much popularity on the bitcoin network as it has on other blockchains such as Ethereum (ETH) and Solana (SOL). Nevertheless, some who study DeFi believe that it can be applied permanently to the Lightning Network, Saying “Stablecoins and fully collateralized loans against your BTC have merit.”
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According to the non-fungible token (NFT) project Will Lee, creator of ‘The Littles’, BTC and LN can boost energy to DeFi and NFTs. He told Cointelegraph that while various new protocols are still in the experimental phase, protocols such as BTC and LN are already demonstrating their inherent strengths, adding:
“For anyone who wants to get into crypto, stability is something they want to be sure of. When I know that an established protocol is in the picture, I have peace of mind, which is overall The crypto also powers the ecosystem. Backed by none other than BTC, your DeFi or NFT project will have many more buyers.”
According to Ignite’s Aliasgar Merchant, DeFi is “struggling” and everyone is doing everything possible to make it through the crypto winter. He cites recent events on Terra and Celius as evidence that DeFi, which is intended to be the core of Web3, is failing. According to Merchant, the two most important aspects of developing a solid DeFi system are interoperability and scalability. “Once the base is strong, we can start to focus more on niche protocols to meet our DeFi needs,” he added.