UXUY founder Kevin: Stablecoins are the biggest variable in the Bitcoin ecosystem

Author: UXUY

Recently, I have participated in many Bitcoin Layer 2 panels, where everyone is discussing how to move Ethereum's smart contracts and ecosystem projects to Bitcoin. My thoughts are a bit different—Ethereum's success has its specific environment, community, and opportunities; history will not simply repeat itself. In my view, the first round of explosive growth for Bitcoin's Taproot Assets protocol is likely to occur in the stablecoin sector.

Dollarization of Bitcoin

The reason Lightning Labs launched Taproot Assets is to "dollarize Bitcoin." As Stark, the founder of the Lightning Network, said:

Taproot Assets helps Bitcoin in various ways, including enabling people to use Bitcoin through stablecoins, allowing them to easily exchange between assets. This is particularly useful in high-inflation environments, as many people around the world live in economies where their currencies are constantly depreciating. Therefore, Taproot Assets helps facilitate the development of stablecoins to Bitcoin. Additionally, since Taproot Assets uses Bitcoin liquidity to route assets issued on the protocol, the demand for Bitcoin on the Lightning Network will increase. Bitcoin will replace the dollar, stablecoins, and everything in between. This is how we dollarize Bitcoin.

In many third-world countries, a silent revolution has begun. Countries like El Salvador, Mozambique, Brazil, Nigeria, and Senegal are starting to use the Bitcoin Lightning Network, where the financial systems have not yet been covered by banks, leading to widespread acceptance of Lightning Network payments. Due to the frequent price fluctuations of Bitcoin, the demand for building stablecoins on the Bitcoin Lightning Network is becoming increasingly urgent.

Stablecoins on the Lightning Network will not only meet real-world payment scenarios but will also provide new opportunities and conveniences for cryptocurrency trading.

Multi-Form Stablecoins

As a key component of the ecosystem, stablecoins are in constant competition. Not long ago, USDT's market capitalization surpassed its historical high, reaching $87.5B, accounting for 69.33% of the stablecoin ecosystem. Now that Bitcoin has entered the "multi-asset era," the business of issuing stablecoins on the Bitcoin network will become a battleground, as it has long held over 50% of the cryptocurrency market share.

Currently, TRON holds nearly half of USDT's market share, and the development of stablecoins on the Bitcoin network will inevitably trigger a significant migration of stablecoin market share in the cryptocurrency world.

Most people tend to equate stablecoins based on the Lightning Network simply with USDC, USDT, and TUSD. However, I believe this is an unrealized trend. On this new starting line of the Lightning Network Taproot, any institution can issue stablecoins. Whether the solutions come from synthetic assets, algorithmic stablecoins, over-collateralized stablecoins, or 1:1 pegged stablecoins remains unknown.

UXUY's Focus on Stablecoin Opportunities

The current opportunity lies in deeply engaging with the Lightning Network community, comprehensively tracking all stablecoin solutions, and actively assisting or participating in the establishment of stablecoin standards. UXUY has exclusively created uPool, a service for multi-chain pipelines, with the core aim of enabling stablecoins to play a more active role in cross-chain transactions. We are also willing to offer this pioneering solution to the Lightning Network and other Bitcoin Layer 2s.

As of November 17, 2023, the capacity of the Bitcoin Lightning Network is 5,362.12 BTC, valued at $0.19B. UXUY predicts that as Taproot Assets officially launches on the Lightning Network, the scale of stablecoins will quickly surpass this number, thereby driving the capacity of the Bitcoin Lightning Network to continue increasing. One can even envision that the DeFi Summer of Ethereum in 2020 will be replayed on Bitcoin.

Taproot Assets and Emerging Assets

The launch of Taproot Assets on Bitcoin greatly solidifies Bitcoin's position as the internet's native digital currency and value transfer protocol, bringing richer application scenarios to the Bitcoin network. Relying on Bitcoin's decentralized natural advantages, the crypto market is gradually shifting towards DEX.

Moreover, due to the good compatibility of the Taproot Assets protocol with Bitcoin development tools, project developers will find it much easier to issue and create emerging assets on the Bitcoin network. For traders, the rich liquidity of Bitcoin, combined with the high security, low transaction costs, and rapid transactions of the Lightning Network, will make it easier to capture valuable projects with significant innovation and development potential.

I strongly feel that the Bitcoin ecosystem will usher in a new round of growth, and the Bitcoin network will officially enter the multi-asset era.

What is UXUY Doing?

As the next-generation decentralized multi-chain trading platform, UXUY is fully betting on the Bitcoin ecosystem: comprehensively connecting to Bitcoin Lightning Network nodes, becoming the world's first DEX to implement Lightning Network nodes; announcing full integration with Bitcoin Taproot Assets; officially launching Universe services for developers; releasing Lightning address services, becoming the world's first DEX to support Lightning addresses… UXUY is well-prepared for the launch of Taproot Assets on the Lightning Network.

We have observed the Muun wallet, which uses both Bitcoin and the Lightning Network to process transactions. Unfortunately, users have been charged high fees, and when the Mempool is congested, Muun generates extremely high transaction costs that users have to bear.

UXUY is actively exploring ways to leverage the advantages of Ethereum and BNB Chain to create more efficient and cost-effective solutions, making transactions based on the Lightning Network and future Taproot Assets more convenient.

Just as Satoshi envisioned in his white paper fifteen years ago, Bitcoin is a peer-to-peer cash transaction system. The widespread adoption of stablecoins on Bitcoin will drive Bitcoin back to Satoshi's original intention.

Currently, the total market size of stablecoins is $126B, yet it operates entirely outside of Bitcoin. Five years from now, let’s revisit this data, and we will have a new answer; this will be the biggest variable in the Bitcoin ecosystem over the next five years.

This is both a challenge and an opportunity for UXUY.