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DeFi on Bitcoin: The Top 4 Use Cases to Build on Rootstock

Published on: 22 August, 2023

Web3 developers thrive on building dApps that solve the biggest challenges facing modern consumers. But too often, poor infrastructure stands in the way of delivering user-friendly technology that’s frictionless and powerful. Tepid transaction speeds and high gas fees prevent cutting-edge protocols from being used for everyday payments — slowing adoption and excluding users in emerging economies.

Compelling alternatives to Ethereum and Solana are now emerging, with Bitcoin layer 2 solutions and sidechains like Rootstock championing security, decentralization, scalability and affordability.

We’re just scratching the surface of what DeFi can achieve — and addressing common pain points is the first step for allowing innovative developers, and their projects, to achieve their full potential. Here are the top use cases that can be built on Rootstock, and the benefits this platform can offer for developers and consumers alike.

Payment Solutions

Payments are one of the most potent use cases for DeFi on Bitcoin. Done right, this can open up financial services to consumers in regions that lack traditional banking — Latin America being a good example.

Rootstock’s smart contract capabilities, which aren’t a native feature of the Bitcoin network, pave the way for automated payments. This can allow funds to flow from one party to another when milestones in an agreement are met — reducing the need for intermediaries.

But for a more inclusive digital economy to emerge, the networks powering DeFi need to offer capacity for mass adoption.

Rootstock’s network offers 300 transactions per second — about 10x more than Ethereum. When coupled with 50x cheaper gas fees, the platform has the capacity to accommodate the next generation of dApps while making them far more economical than before.

Bulla Network is just one of the projects putting Rootstock through its paces. It allows DeFi traders to track and organize their transactions to remain tax compliant, all while enabling Web3 freelancers to request on-chain payments from clients.

Remittance Solutions

According to the World Bank, average remittance fees currently stand at 6.25%. To put this figure into context, that means $6.25 of every $100 transferred is lost to intermediaries. Over the course of a year, this is a transformative amount of money that foreign workers and their loved ones back home are missing out on. And given how remittances represent up to 25% of GDP in El Salvador, Honduras and Jamaica, these economies are being deprived of hundreds of millions of dollars because of fees alone.

Crypto remittance fees are 98% cheaper than what current market leaders can offer — and better still, these services are available 24/7 and open to anyone with a smartphone. And while an international bank transfer can take up to seven days, a Rootstock-based transfer can take just 30 seconds. The added power of RIF Rollup makes them instantaneous.

Companies like Let’sBit are already harnessing Rootstock to make this a reality — unlocking international transactions and giving consumers a way of making their money work for them.

If you want to learn more about remittances in Latin America, download our in-depth report Using Blockchain to Make Remittances Cheaper, Faster, and More Secure

Lending Solutions

For unbanked consumers, unlocking access to credit is often out of the question. But even successful sole traders and self-employed entrepreneurs in major economies face an uphill struggle when they’re in need of a loan. Inflexible lending criteria from major banks can exclude consumers from the market — even if they have collateral and a solid credit history. This leaves them with no choice but to rely on services that charge higher interest rates.

We’re starting to see how blockchain infrastructure can fill this gap — with novel lending products offering flexible repayment terms, competitive interest rates, and faster access to funds. Sovryn is just one project that’s built using Rootstock, and it’s already clocked up $1.5 billion in trades. It allows users to lend their assets directly to others — and use their Bitcoin as collateral for loans with 0% interest.

If you want to learn more about crypto lending, download our data-driven report Finance 3.0: The Rise of Digital Lending in Latin America.

Savings Solutions

Countries around the world are grappling with high levels of inflation. It’s recently hit 40-year highs in the UK and the US, and in parts of South America, hyperinflation is a pressing concern. Consumers are now battling to preserve their savings and ensure they aren’t eroded by the cost of living crisis — and stablecoins are being touted as a way of achieving this.

Nations like Venezuela, Turkey, and Zimbabwe have had unstable local currencies for years, continually diminishing the spending power of hard-working savers. This has led to a growing demand for US dollars — with flagship stablecoins such as USDC and USDT filling this gap. According to Chainalysis, 34% of all small crypto transaction volume in Venezuela is related to stablecoin trades — the most in the whole of Latin America.

Savings platforms built on Rootstock, such as BabelFish, have made their name by offering yields on stablecoin deposits. Now, consumers in countries ravaged by inflation have an alternative to seeing their fiat become worthless. Instead, they have outlets to grow the value of their stablecoins and prepare for their futures.

Untapped Potential

“We’re so early” is a common catchphrase in the crypto space — and when it comes to making DeFi an everyday part of people’s lives, it’s true.

From payments to remittances, lending to saving, there’s a vast market of consumers who are being underserved by legacy financial institutions. The best way of capturing their business — and playing an instrumental role in creating a safe and equitable global financial system — is to build on a robust platform that can meet the moment. And while Ethereum and Solana have been working well and serving developers, Rootstock is currently attracting developers with its EVM-compatibility and its enhanced security by the blockchain that started it all: Bitcoin.

Visit our comprehensive developer portal and learn how you can start building on Rootstock