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The "pumping" of bitcoin liquidity into DeFi protocols, exchange products, and custodial services is a "vampire attack" on the network and threatens its security. This opinion was expressed by a researcher under the nickname Duo Nine.
"Bitcoin is in trouble. If nothing changes in the near future, the situation will not be pleasant. I'm not talking about the halving schedule or block rewards, it's much more serious", the expert said.
He noted that the security of the network is provided by miners, whose share of fees in income should grow over time. However, trends are developing in the ecosystem of the first cryptocurrency, leading to a drop in real on-chain activity.
One of the trends Duo Nine called "wrapped" bitcoins, which are becoming more and more common in the decentralized finance sector. At the same time, the native coins backing these tokens actually remain immovable on their own network, and liquidity and fees flow into DeFi projects on Ethereum and other blockchains.
"BitGo has wBTC, Coinbase has cbBTC. Kraken launched kBTC, while Threshold launched tBTC. Do you think it will just stop? And what will happen in 10 years?" the researcher asked.
The identified problem concerns spot bitcoin ETFs that received approval in the United States at the beginning of the year. 11 exchange structures have accumulated a total of the first cryptocurrency worth more than $20 billion.
The same aspect applies to the storage of bitcoins accumulated by corporations like MicroStrategy in their reserves.
According to Duo Nine, the presence of third-party custodians in these schemes threatens to lose the benefits of digital gold as trustless money.
"BlackRock, Coinbase, wBTC or cbBTC sell you an IOU, which literally means: "I owe you", providing a worthless token in return," the expert noted.
In order to maintain the security of the network, he recommended storing bitcoins yourself and making the most of the blockchain, including "edge cases" like Ordinals or Runes.
Duo Nine admitted that the problems it identified do not pose an immediate danger to the network - the next two decades of block rewards will be able to support the income of miners.
In the comments, the researcher was objected that it was more about the threat of storing cryptocurrency with third-party custodians. The attractiveness of coin mining is regulated for the most part by the mining difficulty mechanism.
Regarding the drop in on-chain activity, users noted that in the scenario described, "native bitcoins" will become more scarce, which will lead to an increase in price.
"Interesting! But can't tools like Runes and Ordinals evolve to the point where DeFi, DePIN, and other features can run natively at the L1 layer? Taproot was a big step, and now OP_CAT will give the network even more momentum if approved", Tanssi Network developers wrote.
Duo Nine agreed, admitting that "in 10 years, the problems will resolve themselves" as bitcoin is adopted and the use of blockchain expands.
"Bitcoin is in trouble. If nothing changes in the near future, the situation will not be pleasant. I'm not talking about the halving schedule or block rewards, it's much more serious", the expert said.
He noted that the security of the network is provided by miners, whose share of fees in income should grow over time. However, trends are developing in the ecosystem of the first cryptocurrency, leading to a drop in real on-chain activity.
One of the trends Duo Nine called "wrapped" bitcoins, which are becoming more and more common in the decentralized finance sector. At the same time, the native coins backing these tokens actually remain immovable on their own network, and liquidity and fees flow into DeFi projects on Ethereum and other blockchains.
"BitGo has wBTC, Coinbase has cbBTC. Kraken launched kBTC, while Threshold launched tBTC. Do you think it will just stop? And what will happen in 10 years?" the researcher asked.
The identified problem concerns spot bitcoin ETFs that received approval in the United States at the beginning of the year. 11 exchange structures have accumulated a total of the first cryptocurrency worth more than $20 billion.
The same aspect applies to the storage of bitcoins accumulated by corporations like MicroStrategy in their reserves.
According to Duo Nine, the presence of third-party custodians in these schemes threatens to lose the benefits of digital gold as trustless money.
"BlackRock, Coinbase, wBTC or cbBTC sell you an IOU, which literally means: "I owe you", providing a worthless token in return," the expert noted.
In order to maintain the security of the network, he recommended storing bitcoins yourself and making the most of the blockchain, including "edge cases" like Ordinals or Runes.
Duo Nine admitted that the problems it identified do not pose an immediate danger to the network - the next two decades of block rewards will be able to support the income of miners.
In the comments, the researcher was objected that it was more about the threat of storing cryptocurrency with third-party custodians. The attractiveness of coin mining is regulated for the most part by the mining difficulty mechanism.
Regarding the drop in on-chain activity, users noted that in the scenario described, "native bitcoins" will become more scarce, which will lead to an increase in price.
"Interesting! But can't tools like Runes and Ordinals evolve to the point where DeFi, DePIN, and other features can run natively at the L1 layer? Taproot was a big step, and now OP_CAT will give the network even more momentum if approved", Tanssi Network developers wrote.
Duo Nine agreed, admitting that "in 10 years, the problems will resolve themselves" as bitcoin is adopted and the use of blockchain expands.
