DFBTC: A Decentralized Bitcoin Collateral Minting and Cross-Chain DeFi Solution

What is DFBTC

Friends, imagine Bitcoin (BTC) as a mountain of gold in the blockchain world—immensely valuable, but a bit "reclusive," not easily able to directly participate in the diverse decentralized finance (DeFi) activities on Ethereum, such as lending, trading, etc. DFBTC (possibly short for Decentralized Financial Bitcoin, also known as AOM) is like a "cross-chain bridge" and "magical converter" built for Bitcoin.

Simply put, DFBTC is a digital asset based on Ethereum, following the ERC20 standard (think of it as a universal technical specification for issuing tokens on Ethereum, like an agreed-upon "currency format"). Its goal is to make Bitcoin more easily circulate and be used in the Ethereum DeFi world.

DFBTC has a fixed exchange ratio with Bitcoin, anchored at 1:10,000. This means each DFBTC represents one ten-thousandth of a Bitcoin's value. When you deposit Bitcoin into the DFBTC system, the system issues you the corresponding amount of DFBTC, so your Bitcoin "transforms" into DFBTC on Ethereum, ready to participate in various DeFi activities.

AOM, on the other hand, is another important token in the DFBTC ecosystem. It acts as the "governance certificate" and "reward points" for this "cross-chain bridge" and "magical converter." By holding AOM, you can participate in DFBTC community governance, propose suggestions or vote on the project's direction, and by staking DFBTC or providing liquidity, you can also earn AOM as rewards.

Project Vision and Value Proposition

The core vision of the DFBTC project is to solve two major "pain points" of Bitcoin: first, its price volatility, and second, its difficulty in circulating between different blockchains (such as the Bitcoin network and Ethereum network), resulting in insufficient liquidity.

By issuing ERC20-standard DFBTC and introducing risk resistance models and yield mechanisms, it aims to help users invest in Bitcoin more safely and efficiently, reduce volatility risk, and increase returns.

Imagine your Bitcoin as gold sleeping in a vault—high in value, but not directly usable for business. DFBTC's value proposition is to "awaken" this "sleeping gold," enabling Bitcoin users to easily and quickly access decentralized protocols on Ethereum, such as Uniswap, Sushiswap, Curve, Balancer (all popular decentralized exchanges or lending platforms in the DeFi world), so more crypto users can benefit from the development of Bitcoin and DeFi.

It is committed to providing better cross-chain services, building a DeFi ecosystem, and promoting the growth of digital assets.

Technical Features

ERC20 Standard and Anchoring Mechanism

DFBTC, as a digital asset, is issued based on the Ethereum ERC20 standard. This means it can be stored, transferred, and traded on the Ethereum network like other ERC20 tokens.

It is anchored to Bitcoin at a ratio of 1:10,000. To obtain DFBTC, you need to send Bitcoin to the project party, and after verification, the system mints the corresponding amount of DFBTC for you. Conversely, when you want to redeem Bitcoin, DFBTC is destroyed, and you receive Bitcoin.

Decentralization and Transparency

The project emphasizes that the entire operation process of DFBTC is fully decentralized and publicly transparent, and anyone can freely initiate audits to ensure its security.

Guarantor Nodes

To ensure the security of Bitcoin custody and the issuance and redemption process of DFBTC, DFBTC introduces a "guarantor node" mechanism. These nodes act as "custodians" of Bitcoin, responsible for safeguarding users' deposited Bitcoin.

To ensure the reliability of these custodians, they must stake more than 150% of assets as collateral (such as ETH, USDT, USDC, DAI, and other high-quality ERC20 assets), so that even if problems arise, users' Bitcoin can be protected.

To become a guarantor node, one must hold 10,000 AOM tokens. In return, guarantor nodes can earn three types of income: custody fees (fees generated from minting and releasing DFBTC), fixed income, and lending income (assets staked by nodes can be used for lending).

Staking and Lending

Users can stake their DFBTC to earn AOM and DFBTC as rewards. AOM rewards are based on a PoS (Proof of Stake) computing power model, while DFBTC rewards come from interest in the lending pool.

DFBTC also supports lending functions, meaning DFBTC can be used as collateral or a lending asset to participate in DeFi lending markets.

Tokenomics

Basic Token Information

• Token Symbol: DFBTC (main asset), AOM (governance and reward token).
• Issuing Chain: Ethereum network (ERC20 standard).
• Total Supply: AOM has a total supply of 2.1 billion tokens.

Token Allocation and Use

AOM's allocation plan is as follows:

• Development Lab: 11.5% (released within 3 years)
• Foundation: 9.5% (released within 3 years)
• Investors: 14% (released within 6-36 months)
• Initial Liquidity: 1%
• Community: 64%

Token Use:

• DFBTC: As Bitcoin's representative on Ethereum, mainly used to participate in various DeFi activities, such as exchanging ETH, lending, and other investment activities.
• AOM:
  • Rewards: By staking DFBTC or supporting DFBTC cross-chain liquidity, you can earn AOM as rewards.
  • Governance: AOM holders can participate in DFBTC community governance and vote on project development.
  • Node Qualification: To become a guarantor node in the DFBTC ecosystem, you need to hold 10,000 AOM.

Team, Governance, and Funds

Team

Currently, public information about the core members and team background of the DFBTC project is very limited. Existing information fragments do not mention specific team member names or their past experience.

Governance Mechanism

The DFBTC project adopts a community governance model, where AOM token holders can participate in DFBTC community governance, voting or making suggestions on major project decisions. This is a decentralized governance approach, aiming to let community members jointly decide the project's development direction.

Treasury and Funding Runway

Details about the project's treasury size, fund reserves, and operational funds (runway) are not specified in current public information.

Roadmap

The DFBTC project began development in 2020.

According to the project plan, its development roadmap is mainly divided into the following stages:

• Version V1: Plans to launch staking and liquidity mining schemes, and open BTC-DFBTC-Ethereum network cross-chain services. This version is expected to go live in June 2021.
• Version V2: Will add cross-chain services for other high-quality main chains, further expanding the DFBTC ecosystem.
• Future Outlook: The AOM token will create more ways to earn yields from high-quality assets in the future, and provide and increase greater value by cross-chaining to other high-quality main chains.

Common Risk Reminders

Friends, every blockchain project comes with risks, and DFBTC is no exception. Before considering participation, be sure to understand the following common risk categories:

Technical and Security Risks

• Smart Contract Vulnerabilities: The operation of DFBTC and AOM relies on smart contract code. If the code has vulnerabilities, it may be exploited by hackers, resulting in asset loss.
• Cross-Chain Bridge Security: Cross-chain technology is key to connecting different blockchains, but cross-chain bridges are often prime targets for hackers. If DFBTC's cross-chain mechanism has security flaws, it may affect user asset safety.
• Degree of Decentralization: Although the project claims to be decentralized, the actual decentralization and censorship resistance of guarantor node operations and Bitcoin custody mechanisms need ongoing attention.

Economic Risks

• Anchor Decoupling Risk: The 1:10,000 anchor between DFBTC and Bitcoin depends on the effective operation of guarantor node collateral and system mechanisms. If collateral is insufficient or mechanisms fail, DFBTC may decouple from Bitcoin's price.
• Collateral Asset Volatility: Guarantor nodes must stake other ERC20 assets as collateral. The price volatility of these collaterals may affect the overall stability of the system.
• Liquidity Risk: If DFBTC or AOM lacks market liquidity, users may have difficulty buying or selling at reasonable prices when needed.
• Market Competition: There are other solutions in the market for bringing Bitcoin into DeFi (such as WBTC), and DFBTC faces fierce competition.

Compliance and Operational Risks

• Regulatory Uncertainty: Global regulatory policies for cryptocurrencies and DeFi are still evolving. Future regulatory changes may impact the operation and legality of the DFBTC project.
• Project Development Uncertainty: Whether the roadmap plans can be realized on time, and whether the project can continue to develop and gain community support, are both uncertain.
• Information Transparency: Insufficient transparency of key information such as team details and audit reports may increase investor risk.

Please remember, the above risks are not exhaustive. Before participating in any crypto project, be sure to conduct thorough independent research.

Verification Checklist

When delving into the DFBTC project, here are some key information points you can verify yourself:

• Block Explorer Contract Address: As ERC20 tokens, DFBTC and AOM should have public smart contract addresses. You can search for these addresses on Ethereum block explorers (such as Etherscan) to view token supply, holder distribution, transaction history, etc.
• GitHub Activity: Check if the project has a public GitHub code repository, and observe its code update frequency, commit records, and community contributions. This helps assess the project's development activity and transparency. Currently, the "aom"-related GitHub repositories found (such as Alliance for Open Media) seem unrelated to the DFBTC project, so you need to look for a dedicated DFBTC codebase.
• Official Whitepaper/Detailed Documentation: Look for the project's complete whitepaper or more detailed technical documentation to obtain comprehensive information, including its economic model, technical implementation details, security audit reports, etc.
• Community Activity: Follow the project's official social media (such as Twitter, Telegram, Discord) and forums to understand the level of community discussion, team communication frequency, and user feedback.
• Audit Reports: Check whether any third-party security agencies have audited DFBTC's smart contracts, and carefully read the audit reports to understand discovered issues and fixes.

Project Summary

The DFBTC (AOM) project aims to solve the problem of Bitcoin's insufficient liquidity in the decentralized finance (DeFi) ecosystem by anchoring it at a 1:10,000 ratio as an ERC20 token (DFBTC) on Ethereum, enabling Bitcoin holders to more conveniently participate in various DeFi applications on Ethereum.

The project introduces a guarantor node mechanism to ensure the security of cross-chain assets, and provides users with earning opportunities through staking and lending functions. The AOM token serves as the ecosystem's governance and reward token, granting holders the right to participate in community decision-making.

Technically, DFBTC utilizes the ERC20 standard and collateral mechanisms to achieve cross-chain circulation of Bitcoin, emphasizing its decentralization and transparency. However, like all emerging blockchain projects, DFBTC faces multiple risks, including smart contract security, anchor stability, market competition, and regulatory uncertainty.

Overall, DFBTC offers a potential solution for bringing Bitcoin into DeFi, but its long-term success will depend on the robustness of its technical implementation, sustained community support, and effective management of market risks. Before considering participation in this project, it is strongly recommended that you conduct in-depth research and fully understand all potential risks. This is not investment advice.