The DG Lab conglomerate includes an investment branch and an adjacent software company just like ConsenSys, the Ethereum powerhouse open-sourced its proposal for self-sovereign derivatives trading on the Bitcoin Blockchain, using the Lightning Network.
These contracts and proposals convert Bitcoin into programmable money possessing power for a large variety of applications.
This offers a crisp variance to the typical DeFi approach, which includes wrapped depiction of bitcoin. cLabs, the Silicon Valley startup recently inherited DeFi company, Summa. Now it seems that DG Lab is the leading statutory that is inspecting DeFi-related opportunities for Bitcoin.
This Lightning Network is employed in this software to execute business logic without clogging up the base-layer blockchain. The commotion among Bitcoin professionals these days is analyzing DeFi functionality applied to the bitcoin currency with the help of such layers. There are various views on how to tackle this opportunity, starting from DLC to soft forks.
Ichiro Kuwahara, a DG Lab researcher, conveys that he is working on a proposition that includes integration of Discreet Log Contracts (DLC) and channels into the Lightning Network. According to him, this can lead to the establishment of multiple contracts without broadcasting transactions on the blockchain.
The software employees the Lightning Network to implement business logic without obstructing the base-layer blockchain. The Bitcoin experts nowadays are imagining the functionality of DeFi being applied to Bitcoin currency through such layers.
Not everyone insists on using the Lightning network for smart contracts. Jeremy Rubin, a Bitcoin veteran and the founder of Judica startup conveys that blockchain’s Liquid Network has been used by firms such as Crypto Garage to experiment with Smart Contracts. This results in complication of construction. Rubin expresses in an interview that he can build a Bitcoin soft fork that could optimize the base layer for smart contracts. He said that he could create such a contract, which is derivative and works with you being offline. He said he could make a valid contract and email it to you.
For the payment to move through, both ends of a Lightning transaction are required to participate simultaneously. Rubin argues that there must exist a technique to make it so that one party can execute a consensual transaction. Public Keys enable the other member to see the proof of everything related to the deal, whenever they come online.
There are sufficient amount of engineers working on DeFi options for Bitcoin that one of them might technically work, even if socially it doesn’t catch on. Only time will advise which ones will find product-market fit and how that may or may not spur crypto adoption.
The DeFi bulls at DG Lab Fund funded approximately $93 million in 2019 and have planned to raise even more in 2020.
Japanese enterprises, including Kakaku.com, an e-commerce startup, KDDI, a provider in the telecommunication industry, have been attracted to invest in the DG Lab. On the other hand, the DG Lab Fund itself invested in Blockstream and Curv, Arwen, River Financial and also in startups in the industries such as AI and security.
Various startups are working with DLC. One of them working closely with them is Suredbits. Another startup named Crypto Garage is making use of Blockstream’s Liquid technology to explore such kind of smart-contract software.
Thibaut Le Guilly, an engineer at Crypto Garage, explains that we define the results of our contracts and form a transaction for all the outcomes. He conveys that it can only be unlocked with one of the outcome transactions or with mutual agreement between the participants of the contract.
Rubin and other Bitcoiners argue that there is a massive gap between DeFi and they need to find a way for them to work directly with each other. Bitcoin DeFi projects want to allow traders to perform tasks directly with Bitcoin and are not using the representatives of Bitcoin.
Ethereum DeFi advocates seem to offer a contrasting evaluation of decentralization than the Bitcoiners. Ethereum people are focused on the ability to perform and provide their services from any data center around the globe. On the other hand, Bitcoin advocates are concentrated on every user being able to run their financial stack while being a participant of the network.
It cannot be neglected that Ethereum DeFi experiments are attracting the fast flow of capital and lose substantial sums when promoters perform iterations. Whereas, Bitcoin DeFi experiments prove to be relatively modest. Le Guilly of Crypto Garage implies that their goal is to increase the awareness about the potential of Bitcoin and they may offer more tools and services to monetize once there are enough people to form a real market.