Bitcoin and Lightning Network can save DeFi from adversity: MicroStrategy CEO

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In light of the recent fragility in the decentralized finance (DeFi) sector, Bitcoin (BTC) maximum and MicroStrategy CEO Michael Saylor feel that Bitcoin and the Lightning network can come to the rescue of the DeFi market.

With two huge protocols, Terra and Celcius, facing acute difficulties within one month of each other, the DeFi sector is going through a difficult time. And in a recent tweet, Saylor suggested that Bitcoin and Lightning could help stabilize the industry.

According to Saylor, Bitcoin provides “a sound ethical, economic and technical foundation for DeFi.” He went on to say that the Lightning protocol and BTC token will be used to build the next generation of DeFi.

Saylor replied to Bloomberg story on Tuesday, highlighting many key concerns in the DeFi field. Mahin Gupta, founder of the digital asset storage platform Liminal, told Bloomberg:

“What happens to Celsius will have serious consequences for the industry. It is an insignificant player, and its apparent failure will have ripple effects.”

Celsius Networks closed withdrawals and other transactions on its platform just one month after the spectacular collapse of the Terra blockchain, which attracted investors with annual returns of around 20%. The collapse of Terra, which was triggered when its stability lost its 1-to-1 peg to the U.S. dollar, and Celsius’ halt in withdrawals added to the losses of cryptocurrencies.

As a result, the CEO of MicroStrategy was very enthusiastic about Lightning Network, the scalable solution of Bitcoin’s Layer 2. According to to Saylor, Bitcoin is the future of money and the Lightning protocol will help with transactional scalability. He added:

“If you are to make payments and transactions at a high speed, you will need a basic layer that is ethically sound, economically sound and technically sound,” he said. “This is Bitcoin. But then billions and billions of transactions will go to layer 2 like Lightning. “

To date, DeFi programs on the Bitcoin network have not reached the same level of popularity as they have on other blockchains such as Ethereum (ETH) and Solana (SOL). However, some people who have studied DeFi think that it can be implemented in a sustainable way on the Lightning Network, saying “Stable currencies and fully secured loans against your BTC have merit.”

Related:Bitcoin Lightning Network capacity charges through 4,000 BTC

According to the unbeaten token (NFT) project “the small” creator Wil Lee, BTC and LN can give energy boost to DeFi and NFTs. He told Cointelegraph that while various new protocols are still in the experimental phase, protocols such as BTC and LN are already proving their own strength, adding that:

“For anyone who wants to enter the crypt, stability is something they want to be sure of. When I know that an established protocol is in the picture, I have peace of mind, which lends strength to the overall crypto ecosystem as well. Supported by no one else than BTC, your DeFi or NFT project will certainly have many more takers. “

According to Ignite’s Aliasgar Merchant, DeFi is “fighting” and everyone is doing everything they can to get through the cryptic winter. He highlighted the recent events on Terra and Celius as proof that DeFi, which aims to be the core of Web3, is failing. The two most important aspects of developing a solid DeFi system, according to Merchant, are interoperability and scalability. He added that “once the base is firm, we can begin to focus more on niche protocols to meet our DeFi needs.”