RSK Bitcoin side chain integrates Dai to connect with DeFi in Ethereum

Oktober 9, 2020 @ 10:59 am

Interoperable DeFi platforms can help with Ethereum’s high transaction fees.

The team behind the Bitcoin Smart Contract enabled side chain extension, RSK, announced on Tuesday that Maker’s stable Dai currency (DAI) is now available on the platform.

The integration makes it possible to transfer Dai from Ethereum to the RSK side chain, making it available for use in their decentralized financial ecosystem supported by Bitcoin.

The solution uses the Ethereum token bridge developed by the RSK Infrastructure Framework (RIF) team. The bridge blocks these tokens in the Ethereum block chain and coins an equivalent amount in RSK, which guarantees a stable and decentralized linkage through intelligent contracts.

While eliminating the old Dai, Maker must deal with the collateral damage

Dai’s integration has been audited by Trail of Bits and the Maker Foundation Integration Team, according to IOVLabs, the company behind RIF. The commercial pairs for RSK DAI, or rDAI, have been configured in the Uniswap bifurcation of the block chain, RSK Swap.

IOVLabs CEO Diego Gutierrez Zaldivar told Cointelegraph that rDAI is designed as a lower rate alternative to escape Ethereum congestion:

„The current situation of the Ethereum network with its extremely high rates and scalability concerns may limit the retail adoption of IAD, especially for those currently underserved by traditional markets that need small transactions and available rates.

MoneyOnChain launches Rootstock-based IAD competitor and RIF leveraged token

Zaldivar also stated that the use of IADs in RSK offers users a similar level of security to Bitcoin through combined mining and rates up to 50 times lower than in Ethereum.

DAI is one of the leading stable currencies in Ethereum, which was integrated into most DeFi and exchange protocols. It is also one of the few decentralized stable currencies currently on the market, although it has recently increased its exposure to custody risk by adding several centralized stable currencies and wrapped tokens as collateral to create DAI.

MakerDAO is often the first type of DeFi protocol transferred to non-ETHEREUM block chains, and RSK introduces a similar system via Money on Chain.

Bitcoin investors would be switching to ‚Wrapped BTC‘ for yield farming

RSK is positioned as a „DeFi Bitcoin“ platform because of its close relationship to it, but it should be noted that RSK is a separate block chain that takes advantage of Bitcoin security and uses a linked version of BTC.

Bitcoin linked in DeFi is also having considerable success in Ethereum through projects like Wrapped BTC, Ren or tBTC.

The latest move to allow cash transfers from Ethereum highlights a general trend of interoperability observed in many non-ETHEREUM DeFi projects. Some investors and commentators believe that the success of these projects depends on pooling Ether’s liquidity and offering a cheaper alternative to allow for further growth of DeFi.