Explain DeFi on Bitcoin to Crypto Natives Grant Proposal

znuenibueb commented 2 years ago

Background What problems do you aim to solve? How does it serve the mission of a user-owned internet?

Back in 2020, DeFi has exploded onto the scene. Ever since, DeFi is commonly linked to the innovation happening on traditional smart contract platforms like Ethereum, Solana, Terra, Avalanche, or Icon. Hardly ever gets recognized that within Bitcoin, a vibrant DeFi ecosystem is developing at full speed.

This needs to change and we as researchers from Insight DeFi (www.insightdefi.com) want to take this task upon us. By writing a well-researched paper explaining what DeFi on Bitcoin is, how it works and what sort of important projects there are that are furthering this cause, we hope to make DeFi on Bitcoin more known and accessible to crypto natives, who still struggle to grasp the emergent DeFi ecosystem on Bitcoin.

Because Bitcoin truly is the most decentralized blockchain acting as a global, public settlement layer for financial services, the user-owned internet is being enhanced when DeFi services based on and around Bitcoin are brought into the spotlight of convicted DeFi proponents.

So far, we have not seen any cohesive research paper on the topic, which is why we think by providing a well-written report, a void can be filled. As there’s not much detailed content on the topic of DeFi on Bitcoin, we believe that such a paper would be happily received by the wider crypto community.

Project Overview What solution are you providing? Who will it serve?

As researchers from Insight DeFi, we are very enthusiastic about DeFi on Bitcoin and want to let the wider crypto community know that DeFi on Bitcoin exists, explain how it works, and teach the crypto natives how they can make use of it. We feel like it is necessary to first appeal to the broader crypto community, which is already familiar with traditional DeFi on Ethereum and other smart contract platforms. Our goal is to get them about DeFi on Bitcoin.

The number one goal of the research paper is to get the word out about DeFi on Bitcoin. It will be written with a theoretical as well as a practical angle. By making DeFi on Bitcoin more known to the broader crypto community, several benefits can be achieved. First, the wider crypto community is getting acquainted with DeFi projects that build on the world’s most prominent and most secure settlement layer, which is Bitcoin. This benefits crypto users as they are using the blockchain layer one solution, which has the highest chances of mattering long term.

Also, network effects around Bitcoin are getting stronger, which ultimately helps to counteract the big fragmentation we have been seeing in the crypto space. With the Bitcoin space growing because its DeFi space is being used by more crypto natives, projects that are building DeFi applications on Bitcoin are getting the attention and the success they deserve.

Scope What are the components or technical specs of the project? What will the final deliverable look like? How will you measure success?

The goal is to write a research paper of around 20 to 30 pages. The paper will encompass a theoretical angle, describing the necessity of DeFi on Bitcoin but will also focus on the practical angle explaining how DeFi on Bitcoin can actually be used. In order to reinforce different points made in the research paper, engaging, educational graphics will be used.

The research paper shall also be written as objectively as possible without particularly favoring a special DeFi on the Bitcoin project. We believe that competition among Bitcoin’s DeFi endeavors is important, but we also believe that these projects have to unit to tackle the bigger DeFi space to convince the world that DeFi on Bitcoin is to be taken seriously and will ultimately evolve into the only real DeFi there is.

The research paper will be published in English. For its publication, cooperation with a big player from the crypto industry will be sought. As researchers from Insight DeFi we have good contacts at CoinDesk, Cointelegraph, Real Vision, or Bitcoin Magazine. To get maximum exposure to the target community of crypto natives, setting up a collaboration with CoinDesk will be our top priority.

Budget and Milestones What grant amount are you seeking? How long will the project take in hours? If more than 20, please break down the project into milestones, with a clear output (e.g., low-fi mockup, MVP with two features) and include the estimated work hours for each milestone.

Total Grant Request: 15.5k USD

Milestones Duration Research: 3 Week Writing & Graphic Design: 4 Week Draft & Proof-Reading: 1 Week Finalized version (Editing): 2 Week Research paper finished: After 10 weeks (2 ½ months) Publishing: Marketing /Creating awareness / Post Engagement: 6 Weeks
Total Time Allocation: 16 Weeks

Team Who is building this? What relevant experience do you bring to this project? Are there skills sets you are missing that you are seeking from the community? Please share links to previous work.

Pascal Hügli & Daniel Jungen, experienced researchers and founders of Insight DeFi, will lead the project. They will act as researchers, writers as well as project coordinators to coordinate with graphic designers, editors, and marketers. First and foremost, they will apply to the DeFi on Bitcoin community to find a professional graphic designer to help design engaging visuals.

Specifically, when it comes to DeFi on Bitcoin, we as researchers from Insight DeFi have already done lots of research on the topic. Out of this work came the realization that a DeFi on Bitcoin research paper is needed and has to be written.

Our Research articles: https://bitcoinmagazine.com/authors/pascalhugli https://www.coindesk.com/author/Pascal%20Hugli/ Book project: https://www.amazon.com/Ignore-Your-Own-Risk-Decentralized/dp/3952510815

Risks What dependencies or obstacles do you anticipate? What contingency plans do you have in place?

Our strongest dependencies are to crypto publication platforms such as CoinDesk and Bitcoin Magazine, which we are dependent on to publish our research report. Thanks to already established relationships with these platforms, the risk of not being published is minimized. Should CoinDesk against our expectations not be willing to publish our research paper, we still have three other platforms of which some have already shown interest in the research paper.

Further, we are minimizing the risk of not being able to deliver the report by putting both our head researchers in charge of the project, thereby assuring that the paper will be finished even if one of them should drop out.

Community and Supporting Materials Do you have previous projects, code commits, or experiences that are relevant to this application? What community feedback or input have you received? How do you plan to share your plan to the community over time and as the final deliverable?

Previous and ongoing Projects: Interview with Ricardo Salinas: Link InsightDeFi Newsletter (German): Link

Our Research articles: https://bitcoinmagazine.com/authors/pascalhugli https://www.coindesk.com/author/Pascal%20Hugli/

Book: Bitcoin – Ignore At Your Own Risk: Link

Community Feedback: We have talked to Sovryn, Mintlayer, and Bitcoin savings app Relai among others, which have confirmed that there is a need for DeFi on Bitcoin education.

Distribution to community: The research paper will be shared with the community through a crypto news platform (e.g. CoinDesk) and on our Social Media Channels. At the same time, members from Insight DeFi (three people to be exact) are currently traveling through Latin America (most prominently El Salvador), where we meet the local Bitcoin community (like Bitcoin Embassy Bar in Mexico City, Bitcoin Beach in El Salvador or Bitcoin communities in Buenos Aires). By connecting with these communities, we put emphasis on sharing with them our work. This would also be done with our DeFi on Bitcoin research paper as these communities are very much in need of such functionalities.

stx-grant-bot[bot] commented 2 years ago

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tycho1212 commented 2 years ago

I support this grant! It's an important and timely project and the team has the experience required to execute. As someone who dug around in many different DeFi on Bitcoin ecosystems before settling on building on Stacks, I'd be happy to help the team with whatever they need

When it comes to the DeFi on Bitcoin report itself, I think it would benefit from an approach that focuses on what is possible to build over what has been built so far. The possibilities recently enabled by Clarity, Taproot, etc are in my mind more impressive than what we've been able to do with it so far

PS: when reading the budgets and milestones I thought, these guys must be Swiss 😅

Akibalogh commented 2 years ago

A detailed, thoughtful Gartner-style research report on DeFi on Bitcoin would be tremendously illuminating, especially if published in major crypto news channels. Similar to Tycho's process, I found DeFi on Bitcoin through first principles thinking and it's clear that this industry (and Stacks in particular) is solving a large, unmet need.

Bitcoin is by far the safest and most widely-adopted crypto in the world, and is the crypto most accepted by sovereign states (El Salvador, Lugano, now arguably Ukraine). Large corporations are also relying on Bitcoin more, for both investing and debt financing purposes. There are fundamental financial use cases that require basic smart contract capability, for common use cases like lending, currency hedging and derivatives trading. Wrapping Bitcoin to use it in EVM-compatible systems is a necessary workaround today but compromises the user experience and its inherent safety benefits as well. The most plausible solution is to enhance Bitcoin's capabilities to cover these basic use cases.

A few questions that could be addressed:

Who are the major DeFi players on Bitcoin? What has been the evolution of Stacks and their alternatives (Liquid, RSK, etc)? What are the capabilities of each?
What is the value of non-custodial, decentralized DeFi vs. the current custodial standard? Who is likely to rely on DeFi the most and what are some scenarios for how this may evolve?
A recent Electric Capital report showed that there are about 800 developers in Bitcoin, which is relatively low compared to its market cap. Why is there a disparity and how is the developer ecosystem projected to grow?
What are barriers to adoption or risks to DeFi on Bitcoin? What alternatives exist to DeFi on Bitcoin and what are various scenarios that could play out?

I'd love to support this report as well. Please feel free to contact me as needed (I'm akibalogh#1043 on Stacks Discord).

tycho1212 commented 2 years ago

Very good points @Akibalogh

will-corcoran commented 2 years ago

@znuenibueb - Thanks for this very interesting proposal. We are excited to approve it and support your research.

If you could connect with @tycho1212 and @Akibalogh that would be great. They are both involved in developing Bitcoin native DeFi protocols (DLC.link and Zest Protocol/Trust Machines) they can give you some great insights and potentially connect you to others (Lava Protocol comes to mind).

Lastly, I would also like to underscore the comment above about urging you to not only focus on what has been done / what is in development, but more importantly what is yet to come. It would be great if this paper served as a benchmark for all the young builders to strive for!

I am going to release $8k now and $7.5k at the conclusion of your project. Please let me know if you have any issues with that.

Best, Will

stx-grant-bot[bot] commented 2 years ago

Congratulations. Your grant is now approved. Please complete the on-boarding link here: https://grants.stacks.org/onboard?q=51f64850a33001e9bae378eaf8a883a3

znuenibueb commented 2 years ago

Hey Will

Thank you very much for accepting out grant! This is very good news. We will surely connect with the people you proposed. They will be of great help.

I got a Github notification to complete the Stacks grant proposal but when I clicked on the link, it said that there are no pending grants (see screen shot below).

Would you know why this is?

Thanks for your response

Best

Pascal

Von: Will Corcoran @.> Gesendet: Samstag, 5. März 2022 21:58 An: stacksgov/Stacks-Grants @.> Cc: znuenibueb @.>; Mention @.> Betreff: Re: [stacksgov/Stacks-Grants] Explain DeFi on Bitcoin to Crypto Natives Grant Proposal (Issue #301)

@znuenibueb https://github.com/znuenibueb - Thanks for this very interesting proposal. We are excited to approve it and support your research.

If you could connect with @tycho1212 https://github.com/tycho1212 and @Akibalogh https://github.com/Akibalogh that would be great. They are both involved in developing Bitcoin native DeFi protocols (DLC.link and Zest Protocol/Trust Machines) they can give you some great insights and potentially connect you to others (Lava Protocol comes to mind).

Lastly, I would also like to underscore the comment above about urging you to not only focus on what has been done / what is in development, but more importantly what is yet to come. It would be great if this paper served as a benchmark for all the young builders to strive for!

I am going to release $8k now and $7.5k at the conclusion of your project. Please let me know if you have any issues with that.

Best, Will

— Reply to this email directly, view it on GitHub https://github.com/stacksgov/Stacks-Grants/issues/301#issuecomment-1059830280 , or unsubscribe https://github.com/notifications/unsubscribe-auth/AXSYM547TRBF2P74TNCI7ALU6PDDVANCNFSM5P2TXUFQ . Triage notifications on the go with GitHub Mobile for iOS https://apps.apple.com/app/apple-store/id1477376905?ct=notification-email&mt=8&pt=524675 or Android https://play.google.com/store/apps/details?id=com.github.android&referrer=utm_campaign%3Dnotification-email%26utm_medium%3Demail%26utm_source%3Dgithub . You are receiving this because you were mentioned.Message ID: @.***>

will-corcoran commented 2 years ago

@znuenibueb -

I am just circling back to this - can you please confirm you are now all set and your issue has been resolved.

Thanks Will

znuenibueb commented 2 years ago

Dear Will

We are all set.

My research friend and I are in the process of carving out the structure of the research paper. After this we will start doing the proper research by also reaching out to the people and projects you mentioned. In the process of this, we are also waiting for the payment.

Thanks

Best Pscal

Von: Will Corcoran @.> Gesendet: Samstag, 12. März 2022 15:08 An: stacksgov/Stacks-Grants @.> Cc: znuenibueb @.>; Mention @.> Betreff: Re: [stacksgov/Stacks-Grants] Explain DeFi on Bitcoin to Crypto Natives Grant Proposal (Issue #301)

@znuenibueb https://github.com/znuenibueb -

I am just circling back to this - can you please confirm you are now all set and your issue has been resolved.

Thanks Will

— Reply to this email directly, view it on GitHub https://github.com/stacksgov/Stacks-Grants/issues/301#issuecomment-1065889882 , or unsubscribe https://github.com/notifications/unsubscribe-auth/AXSYM52IEAJR7R4JRKXG2YLU7SQNJANCNFSM5P2TXUFQ . Triage notifications on the go with GitHub Mobile for iOS https://apps.apple.com/app/apple-store/id1477376905?ct=notification-email&mt=8&pt=524675 or Android https://play.google.com/store/apps/details?id=com.github.android&referrer=utm_campaign%3Dnotification-email%26utm_medium%3Demail%26utm_source%3Dgithub . You are receiving this because you were mentioned.Message ID: @.***>

will-corcoran commented 2 years ago

Hello and thank you for participating in the Stacks Foundation Grants Program!

We are in the process of migrating from GitHub to the new Grants Dashboard. In order to complete your grant, you will need to submit any remaining Progress Review and/or Final Review requests through the Dashboard in order to receive your remaining payments.

If you have questions about the Grants Dashboard in general please email ambassadors@stacks.org.
If you have questions regarding payments and/or contracts please email payments@stacks.org.

Lastly, please note we are marking this grant 'closed' on GitHub for organizational purposes, but it is still 'open' on the Grants Dashboard.

Thanks and we hope to continue to support your efforts with additional grants!

Best, Will

stacksgov / grants-program

Explain DeFi on Bitcoin to Crypto Natives Grant Proposal #301