⚡Rujira’s Omnichain DeFi Solves the Native Bitcoin Problem
Bitcoin may be the archetype of crypto, but ironically it has, for the most part, sat outside the very industry it inspired: DeFi.
Rujira will soon change this, making its complete suite of DeFi applications available to the 7th largest asset in the world by market cap—importantly, without any centralized intermediary or third-party bridge.
This article will dive into just how Rujira’s omnichain DeFi is, in fact, Bitcoin DeFi
⚡The Challenge of Native Bitcoin in DeFi
Despite DeFi’s breakneck pace, it has never been able to tap Bitcoin’s ~$2T value in a fully decentralized and permissionless fashion.
Many noble attempts have been made, and many grifts from “CeDeFi” operators—but, because the Bitcoin blockchain doesn’t natively support smart contracts (a necessity to build advanced DeFi applications), delivering DeFi technologies to Bitcoin remains a code yet to be cracked.
This has forced Bitcoiners to have to make a tough choice when it comes to borrowing against their holding, or seeking to generate earnings, or simply trading their BTC: either a) don’t—just hold & wait; or, b) risk third party-trust & bridge exploits.
But, thanks to Rujira, the Bitcoiner’s dilemma will soon end.
⚡How Rujira Will Solve This
Because its foundations are built on the fully decentralized THORChain tech (which supports native BTC), Rujira, with its smart contract functionality, stands in a singular position to enable access to DeFi for Bitcoiners without relying on any centralized intermediary (see Secured Assets).
This means that Rujira becomes a conduit between the two spheres: it brings DeFi to Bitcoin holders, and it unlocks native Bitcoin’s value to existing DeFi users (who, at the time of writing, mostly use wrapped BTC issued by BitGo on Ethereum).
In short, no other DeFi protocol has been in such a position to bridge the gap between Bitcoin and DeFi in a fully decentralized fashion.
With this unprecedented access route to DeFi, Bitcoiners might understandably be curious about what possibilities lie in wait for them. Let’s now survey the core applications Rujira will offer to Bitcoin holders.
⚡️Rujira’s Core Applications
📊 Spot & Margin Trading in an Orderbook
RUJI Trade will offer users spot trading in an orderbook, with the option to use margin trading with up to 10x leverage. Trading in an orderbook will grant traders much more control over their strategies and execution price vs. a traditional AMM-DEX.
Until this innovation, the only option available to trade native BTC in an orderbook was to use a centralized exchange. With RUJI Trade, principled traders will finally be able to long, short, or hedge native BTC using an orderbook in a fully decentralized way.
Because Rujira separates the DEX (orderbook) from its AMM (automated market maker), it is able to pull liquidity from a variety of sources and market making strategies, combining them into a single orderbook. This results in much deeper liquidity, which in turn creates better pricing for traders.
Another novel feature of RUJI Trade is Oracle Orders, allowing users to buy or sell at a fixed discount/premium to the underlying asset’s oracle price, opening up the design space for innovative trading and market making strategies.
🔁 Providing Liquidity
Add BTC to Rujira’s liquidity pools, making market in e.g. the BTC/USDC pair for a downside (and upside) mitigated position, earning you trading profits based on market volatility. Or use the single-sided BTC arbitrage strategy, or the delta neutral market making strategy if you don’t want to take impermanent loss risk.
This route not only boosts the Rujira Network’s overall efficiency by deepening liquidity. It will also help cement Bitcoin’s status as money by allowing projects to pair their token with native BTC in a fully decentralized way.
🔮 Perpetual Trading
Use your native BTC as collateral to speculate on crypto prices with perpetual futures with up to 50x leverage, with helpful features like stop losses, take profits, and limit orders.
RUJI Perps uses an innovative system of locked liquidity, where liquidity providers deposit assets that are locked against traders’ positions, ensuring solvency of the protocol regardless of market volatility.
This also provides another option for Bitcoin holders to earn real yield on their BTC in return for providing liquidity for perps traders.
💰 Borrowing
Whether you want to speculate on the markets or to pay for real-life expenses, you may borrow stablecoins and other assets connected to THORChain, using your BTC as collateral on Rujira’s decentralized money markets. Bitcoin holders will now have the option to unlock part of their BTC value without having to sell their Bitcoin, and without having to use a wrapped version.
Concretely, as a user, you will be able to start with native BTC in your Bitcoin wallet, specify which asset and how much you want to borrow (e.g. USDC at 30% LTV), specify on which chain you want to receive it (e.g. Base), then sign one transaction on the Bitcoin network and receive your USDC on Base a few blocks later. Simple.
All of this is permissionless–no third party or bank acting as gatekeeper; no credit checks or lengthy applications required. Additionally, there are no minimum or maximum loan durations; partially repay or fully close your position at any time.
🎁 Lending
Or, play the other side: Loan out your BTC and earn some low-risk, passive yield from borrowers’ interest payments.
RUJI Lending will allow you to earn interest on your Bitcoin while maintaining the permissionless right to withdraw your deposit at any time, as long as asset utilization remains under 100%. Loans are overcollateralized by borrowers, meaning the protocol ensures that there is always more than $1 of collateral backing each $1 of BTC deposit loaned out.
If a position becomes at risk, meaning the collateral value drops below a certain threshold relative to the value of the loan, a portion of the collateral becomes available for liquidation with the proceeds used to repay part of the debt, bringing the position back to a healthy level and protecting protocol solvency.
All without any centralized intermediary, just smart contracts following the same rules for everyone.
🪙 Overcollateralized BTC-backed stablecoin
Rujira will launch the world’s first 100% decentralized stablecoin backed by native BTC and secured by THORChain’s decentralized technology.
This stablecoin will be soft-pegged to the US dollar, backed by BTC and overcollateralized (max LTV will likely be 70%). There will be a dynamic interest rate model to help support the peg. The Bitcoin collateral will be a Secured Asset verifiably 1:1 backed by native BTC located in THORChain Asgard Vaults.
🔨 Liquidation Bidding
Another “world’s first” that Rujira brings to Bitcoin DeFi is its public marketplace for bidding on at-risk BTC collateral from debt-related products (the money market and the BTC-backed stablecoin).
With RUJI Liquidations, users will be able to acquire liquidated BTC at up to a 30% discount.
Rujira’s liquidation engine differs from the typical liquidation mechanism for DeFi protocols that work on a first-come-first-served basis and at a fixed liquidation discount, leaving this market to a few highly efficient bot operators. Instead, Rujira implements a democratized, Dutch auction queue, where bid orders are determined by discount size (smallest first) rather than speed. This effectively allows everyone to participate in liquidation bidding and buy local bottoms at a discount, not just highly-skilled bot operators.
This also creates a competitive market for liquidations, which ultimately reduces the cost of being liquidated for borrowers. A win-win for everyone (except the liquidation bot operators).
🤝 Options
RUJI Options will allow you to trade put and call options that grant you the right (but not the obligation) to buy or sell native Bitcoin in the future at a pre-set price.
With capped losses set to the opening premium (price paid for the option), Rujira will offer experienced traders a pathway to profit in any type of market.
⚡️Summary
The breadth of offerings in Rujira’s DeFi Suite, all underpinned by THORChain’s proven and trustless security design, will give Bitcoiners a unique entry point into the now-seasoned DeFi industry. Rujira will allow Bitcoiners to:
- Use their native BTC as secured assets on Rujira with a decentralized, verifiable, proven security model
- Trade / borrow against / generate yield on their native BTC thanks to Rujira comprehensive DeFi suite
- Enjoy a CEX-like experience with best-in-class UI, but fully decentralized and accessible directly from their Bitcoin wallet
Truly, Rujira’s omnichain DeFi is Bitcoin DeFi.