Overview of BounceBit's design architecture, why can Bitcoin generate staking rewards?

The Bitcoin re-collateralization project in the style of Chinese ink painting, BounceBit, recently received investment from Binance. However, how can BTC without native internet revenue attract users to pledge or re-collateralize? Where does BounceBit's revenue come from? This article will use the architecture of BounceBit as a starting point for explanation.

What Problem Does BounceBit Aim to Solve

Bitcoin currently does not have native yields. BounceBit aims to create a staking ecosystem to provide Bitcoin holders with native network yields similar to ETH.

But where do the yields come from? Unlike the Ethereum network, the Bitcoin network does not have native network yields. So how can the goal of "allowing Bitcoin holders to earn yields" be achieved? The answer is to first create an ecosystem.

Introduction to BounceBit

BounceBit Ecosystem

BounceBit is a Bitcoin ecosystem project that can be divided into BounceBit Protocol and BounceBit Chain:

• BounceBit Protocol is a staking protocol that serves as the funding gateway for the entire ecosystem. Users can stake assets such as BTC and stablecoins to receive liquidity staking tokens BounceBit BTC, BBTC as proof of stake.
• BounceBit Chain is a PoS Layer1 network that hosts various applications including decentralized exchanges, decentralized lending protocols, etc. Users can choose to use liquidity staking tokens for on-chain services or stake them in BounceBit Chain to secure the network and earn more yields and receive liquidity re-staking tokens stBBTC.

By building an ecosystem from scratch, BounceBit has successfully turned BTC into an asset with native network yields.

BounceBit Protocol

Since it is compatible with the EVM network, BounceBit Protocol can also accept assets from Ethereum and BNB Chain. For users, the user experience is more user-friendly, requiring only the use of MetaMask to interact with the protocol.

After staking assets, users receive liquidity staking tokens such as BBTC, BUSDT, BETH, which can be used for cross-chain transactions and participation in applications on BounceBit Chain.

Users can entrust staked assets to CeFi institutions and earn interest. Most institutions accept assets like BTCB, Bitcoin-wrapped tokens on the BNB Chain.

In order to allow users to stake Bitcoin and other assets more securely, BounceBit collaborates with external custody institutions to enhance market trust. Since the Bitcoin network does not have a native virtual machine, many asset service-related operational logics are not protected by blockchain consensus, meaning that project parties can basically steal user assets if they intend to do so. In order to allow users to stake assets more confidently, BounceBit partners with third-party custody institutions such as Mainnet Digital and Ceffu to enhance asset security through a CeFi-DeFi hybrid structure.

BounceBit Chain

BounceBit Chain is a PoS Layer1 network where validators stake BTC and its native BounceBit BTC to secure the network. This is a network compatible with EVM that uses dual-token staking to enhance security. Currently, the network is still in the testnet phase.

Users can cross-chain BBTC, BUSDT, BETH, and other tokens to BounceBit Chain to participate in DeFi applications to earn profits. They can also choose to restake BBTC to secure the network and receive liquidity re-staking tokens LRT to participate in other applications for further profit. They can also opt to deposit in CeFi yield pools.

Details on the liquidity re-staking token LRT project's corresponding opportunities and risks

To maximize the value generated by the ecosystem and attract more users to stake assets, BounceBit claims it will launch the BounceBit App Store, allowing users to easily access on-chain services. For developers or project teams, they can design better applications and reach users through BounceClub.

Future Goal: Building a Complete Bitcoin Staking Ecosystem

In addition to the current structure mentioned above, BounceBit's long-term goal is to integrate other Bitcoin re-staking infrastructures to become the foundational infrastructure for these re-staking projects. It is hoped that this will accelerate the development of the Bitcoin ecosystem.

A New Route Unlike the Norm

Currently, most applications in the Bitcoin ecosystem are designed to build infrastructure on the Bitcoin network using Layer2 architecture. BounceBit, on the other hand, is creating a completely new Layer1 ecosystem and generating value through numerous applications on this network, enabling Bitcoin to become a token with staking rewards.

BounceBit places the value of EVM applications on top of BTC.

However, from the above structure, it is evident that the assets in the entire ecosystem are staked layer by layer, increasing associated risks. Whether it's BounceBit Protocol, Mainnet Digital, Ceffu, cross-chain bridges, BounceBit Chain, or any on-chain applications facing issues, user assets may be at risk, so participants need to be especially cautious.