According to Michael Saylor, Bitcoin provides a strong ethical, economic, and technical underpinning for DeFi.
Given the current turbulence in the decentralized finance (DeFi) industry, Bitcoin (BTC) maximalist and MicroStrategy CEO Michael Saylor believes Bitcoin and the Lightning network can save the DeFi business.
The DeFi sector is in trouble, with two big protocols, Terra and Celcius, experiencing severe problems within a month of each other. Saylor recently indicated that Bitcoin and Lightning may help stabilize the sector in a tweet.
Saylor describes Bitcoin as a “solid ethical, economic, and technical underpinning for DeFi.” He continued by saying that the Lightning protocol and the BTC coin will be used to build the next iteration of DeFi.
Saylor was responding to a Bloomberg report published on Tuesday that highlighted several critical issues in the DeFi field. According to Mahin Gupta, founder of digital asset custody platform Liminal:
Celsius Networks has suspended withdrawals and other activities on its platform less than a month after the stunning collapse of the Terra blockchain, which tempted investors with annual returns of approximately 20%. The collapse of Terra, which occurred when its stablecoin lost its 1-to-1 peg to the US dollar, and the suspension of withdrawals by Celsius have added to cryptocurrency losses.
As a result, the CEO of MicroStrategy is highly excited about Lightning Network, Bitcoin’s Layer 2 scalability option.
Saylor believes that Bitcoin is the currency of the future and that the Lightning protocol will help with transaction scalability. He went on to say:
“If you’re going to perform high-speed payments and transactions, you’re going to need an ethically sound, economically sound, and technically solid base layer,” he said. “That is exactly what Bitcoin is. But then there will be billions of transactions on a layer 2 like Lightning.”
DeFi apps on the Bitcoin network have yet to achieve the same level of popularity as those on other blockchains like Ethereum (ETH) and Solana (SOL). Nonetheless, other researchers feel that DeFi may be done sustainably on the Lightning Network, stating that “stablecoins and completely collateralized loans against your BTC have merit.”
According to Wil Lee, the founder of the nonfungible token (NFT) project ‘the littles,’ BTC and LN may provide a surge of vitality to DeFi and NFTs. While several new protocols are still in the testing phase, he said protocols like BTC and LN have already demonstrated their intrinsic strength, adding:
“For anyone who wants to enter the crypto, stability is something they want to be sure about. When I know that an established protocol is in the picture, I’ve peace of mind, which lends strength to the overall crypto ecosystem as well. Backed by none other than BTC, your DeFi or NFT project is sure to have many more takers.”
According to Aliasgar Merchant of Ignite, DeFi is “struggling,” and everyone is doing everything they can to survive the crypto winter. He cited recent occurrences on Terra and Celius as evidence that DeFi, which is supposed to be the heart of Web3, is failing. According to Merchant, the two most crucial factors in designing a strong DeFi system are compatibility and scalability. “Once the foundation is solid,” he says, “we can start focusing more on niche protocols to cater to our DeFi demands.”