Merlin Chain, a layer-2 blockchain, is set to offer new yield opportunities for Bitcoin traders, bringing the benefits, and of couse the risks of decentralized finance to holders.
Risk business
While Ethereum investors have long enjoyed many yield-generating options like staking rewards and liquidity mining, Bitcoin holders have largely missed out on similar benefits.
Instead of risking their stacks, Bitcoin investors have primarily relied on the asset’s gradual appreciation and the relative safety from hacker attacks and exit scams that have plagued other cryptocurrencies.
DeFi critics argue that users don’t hold their keys, making the sector risky.
Merlin Chain’s founder pointed out Bitcoin’s strong market position and the lack of yield opportunities for its holders.
“Bitcoin has been one of the best-performing assets over the past decade, surpassing all of the expectations. But its holders have missed out on the yields available in other ecosystems. We are excited to offer Bitcoin investors the chance to earn yields and participate in the DeFi ecosystem.”
Give away your keys, get rewards
To take advantage of Merlin Chain’s yield opportunities, users will need to bridge their Bitcoin to the network using the Merlin Bridge, effectively transferring ownership.
While this process involves locking Bitcoin on layer 1 and receiving gas Bitcoin, it comes with huge risks.
In the past, countless similar setups have resulted in traders losing access to their funds when projects faced bankruptcy or insolvency.
The locked Bitcoin can be staked in Merlin’s Proof-of-Stake mechanism to generate M-BTC, a wrapped Bitcoin asset earning staking rewards similar to stETH.
Bitcoin holders can stake M-BTC on DeFi platforms like Solv Protocol to earn SolvBTC and access various DeFi services.
Everything what’s in the Ethereum-based DeFi. Risks too.
They can also supply liquidity to earn yields from Merlin-integrated protocols and explore other DeFi activities like lending, borrowing, and derivatives, but it’s important for users to weigh the potential extra rewards against the associated risks.
In the last month and a half, Merlin Chain has successfully bridged over $13 billion worth of Bitcoin and distributed over $700 million worth of Bitcoin to layer-2 networks.
The platform has partnered with leading crypto custodians, such as Fireblocks, Cobo, Ceffu, and Antalpha.
