People are still seeking the optimal solution that can fully inherit the security of Bitcoin while also creating a decentralized financial ecosystem for Bitcoin (BTCFi). This article will introduce the BTCFi solution provided by the Core chain.
Table of Contents:
What is Core chain?
Can it become the optimal solution for BTCFi?
Core chain’s consensus mechanism based on Bitcoin PoW
Bitcoin staking to be launched in Q2 2024
Introducing stCORE to lay out BTC DeFi
Core team and background
Core token CORE
Conclusion
Bitcoin celebrated its 15th “birthday” this year and its fourth halving, which will occur soon. 92% of the total supply of 21 million tokens has already been mined. At this historic moment, applications such as Bitcoin NFTs and engravings have exploded in the market in the past six months. The heat of the Bitcoin smart contract ecosystem, represented by Stacks, has also been reignited. For current Bitcoin, DeFi is the most lacking but also the most imaginative aspect.
The Core chain is an EVM-compatible Layer 1 blockchain driven by Bitcoin. “Bitcoin-driven” is the key for Core chain to inherit the security of the Bitcoin network, which is reflected in the consensus mechanism of the Core chain.
The consensus mechanism of the Core chain combines Bitcoin’s PoW. Specifically, 21 validation nodes of Core are selected through a hybrid scoring system, which includes the Bitcoin mining power staked on the validation nodes and the amount of staked native token CORE. In the future, Bitcoin staking is also planned to be one of the criteria for node scoring.
As a newcomer in the BTCFi field, whether Core chain can become the optimal solution remains to be verified by the market. However, its adoption of Bitcoin PoW consensus mechanism and the upcoming Bitcoin staking undoubtedly provide strong support for its security and decentralization.
The biggest difference between the Core chain and other current Bitcoin ecosystem projects is that the consensus mechanism of the Core chain directly uses Bitcoin’s PoW. Bitcoin’s PoW consensus is currently the most secure and decentralized ledger mechanism verified by time.
Therefore, Core chain incorporates Bitcoin’s PoW mechanism into its consensus, providing a secure “protective shell” for both ensuring the security and decentralization of Bitcoin and Core chain.
For Bitcoin miners, the consensus mechanism of the Core chain also provides a choice to generate income without increasing additional energy and time costs, offering diversified income possibilities for miners in the face of continuous reduction of Bitcoin rewards. According to the official website of Core chain, the hash power of the validation nodes staked in the Core chain is 218.32 EH/s, accounting for 35% of Bitcoin’s total hash power of 611.3 EH/s. This number even reached 40% in August 2023. Major exchanges such as Huobi, OKX, and Bitget have joined the Core chain as validation nodes to jointly ensure its security execution.
Building on the foundation of Bitcoin’s PoW, the Core chain will introduce Bitcoin staking in its consensus mechanism in Q2 this year. In other words, the validation node scoring of the Core chain will include three weighted factors in the future: Bitcoin mining power, staked CORE tokens, and staked Bitcoin.
Bitcoin is currently the most valuable and consensus-strong encrypted asset. The introduction of Bitcoin staking by the Core chain, combined with the underlying use of Bitcoin PoW to maintain the decentralization and security of the public chain, has great potential to fully open up the prosperity of BTCFi.
For Bitcoin holders/investors, the new Bitcoin staking feature of the Core chain will also be a new and competitive investment option because the Bitcoin staking process of Core chain is non-custodial, which is safer compared to some centralized custodial institutions.
The participation of Bitcoin stakers will fully usher in a BTC 2.0 era, allowing Bitcoin stakers, Bitcoin mining power stakers, and CORE stakers to continuously gain profits, forming a mutually positive economic cycle.
Thus, the introduction of the Core consensus mechanism is complete. Core is a public chain that is both EVM-compatible and can fully inherit the security of Bitcoin. It has the conditions to develop Bitcoin DeFi and provide infrastructure for existing DeFi projects to migrate to Core and build the Bitcoin DeFi ecosystem together.
Liquidity staking is currently the highest proportion in the DeFi field, and it can increase the utility of tokens more easily compared to more complex DeFi activities. Therefore, Core’s initial exploration in Bitcoin DeFi focuses on liquidity staking strategies. Core recently announced the launch of liquidity staking token stCORE to solve the problem of non-tradability of tokens after staking CORE. Users will receive an equivalent amount of liquidity staking token stCORE after staking CORE, and stCORE can still be traded, sold, or used in other DeFi protocols while CORE is staked in Core, enhancing user liquidity.
In addition, Core’s 2024 Bitcoin staking roadmap on the Core chain shows that it will also launch Wrapped BTC minting and locking on Core, Bitcoin staking on the Core chain, and Wrapped BTC incentive mechanism to enhance the utility of Bitcoin on the Core chain.
To further understand Core, it is important to understand the team and organization behind it. The L1 public chain Core is operated by the decentralized organization Core DAO, which currently has more than 45 members worldwide. Among them, core contributor Rich Rines has three years of experience at Coinbase and serves as the Chief Engineer responsible for fund flows. Other team members also come from well-known large institutions in the industry and hold high positions, including Blockchain.com, MoonPay, and BNB Chain.
The strong background of the Core DAO contributor team and their operational effectiveness is also reflected in social media data. The number of Core DAO followers on the X (formerly Twitter) platform has exceeded 2.1 million, and the number of community members on Discord exceeds 250,000, indicating that they have a large community base.
The token CORE is the utility and governance token of the Core chain, which can be used to pay for transaction gas fees, stake on the Core network, and participate in network governance. It was launched in February 2023 with a total supply of 2.1 billion tokens. In its token economic model, the total supply is distributed as follows: 39.995% (approximately 840 million tokens) for node mining rewards, 25.029% (approximately 525 million tokens) for user rewards, 15% (approximately 315 million tokens) distributed to project contributors, 10% (approximately 210 million tokens) for reserves, 9.5% (approximately 200 million tokens) allocated to the treasury to support the development of the Core chain ecosystem, and 0.476% (approximately 10 million tokens) for relay node rewards.
In the above distribution model, it can be seen that the most tokens are allocated to node mining. 39.995% of the node rewards will be distributed over approximately 81 years, with block rewards decreasing by 3.6% annually.
The various features of the Core chain revolve around building the BTCFi ecosystem, including its innovative consensus mechanism that combines PoW, a large user base, and compatibility with EVM. In 2024, Core will use these features to complement and improve the Bitcoin DeFi ecosystem. At the same time, the powerful network and high security of Bitcoin will support the stable and secure execution of the Core chain, reinforcing each other and evolving together.
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