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Whether backed by fiat, gold or cryptocurrency, interest-bearing, non-collateralized or decentralized, stablecoins have become an important part of the digital asset ecosystem in recent years.
Created as an alternative to the inherent volatility of cryptocurrencies like Bitcoin and Ethereum, stablecoins are marketed as viable payment solutions for enterprise blockchain use cases, as merchants should – in theory – have no qualms about accepting them. Speaking of merchants, there are rumors that PayPal (NASDAQ: PYPL) may be rolling out their own stablecoin having recently announced support for a range of cryptocurrencies.
The emergence of decentralized finance (defi) – a subset of the cryptocurrency market that includes tools for interacting without trust with open finance protocols such as saving and lending – has put the spotlight on stablecoins like DAI and USDT, providing them with a myriad of use cases.
One of the latest examples of stablecoins is BXTB, a defi-based protocol that collateralizes other stablecoins to create its own CHIP token, hosted on a low-energy, high-throughput consensus mechanism called Proof of Capacity (PoC). CHIP, in other words, inherits the stability of proven stablecoins deposited as collateral, while benefiting from faster speeds and lower transaction fees.
Bringing stability to e-gaming
BXTB, an anonymous and community-driven protocol, aims to transform the stablecoin market through a yield-generating currency suitable for enterprise use cases. Initially, its ambition is to unify the payment and settlement systems of the multibillion gambling industry, partnering with operators, platform providers and publishers to ensure a reliable and seamless betting experience.
The BXTB mainnet was launched earlier this year and the platform has already partnered with several gaming operators including JustBet and GameWorks Technologies (GWX).
A vocal advocate is Nigel Hughes, once principal consultant for NEM (New Economy Movement) and current chief technical consultant for cryptocurrency mining company R3V.lab. Hughes first stumbled upon the defi platform in 2018 and was immediately intrigued.
Nigel Hughes
“In the course of my work on NEM I met the people behind BXTB, which was then just an idea that had been considered,” recalls Hughes. “I was impressed that the core team took Satoshi Nakamoto’s approach while staying out of the spotlight, and I felt that their vision was very much aligned with the long term – something that cannot be said of too many projects in the defi e. stablecoin space. “
In the years following that fateful meeting, Hughes played a key role in promoting BXTB and driving adoption. While many members of the community prefer to remain anonymous, the blockchain veteran is happy to fight for the platform, which he believes will “shift blockchain technology towards greater inclusiveness”, while addressing the lack of value created by existing use cases.
“Businesses are looking for stablecoin solutions that can process transactions economically, quickly, and with high speed and volume,” notes Hughes. “By creating a collateralisation mechanism that transforms existing secure and successful stablecoins into high-yielding CHIPs, it is possible to provide an enterprise-ready solution and network of stablecoins that can be immediately deployed for real-world use cases.” .
A triple token model
Although the CHIP stablecoin is the central axis of the BXTB ecosystem, the platform actually features multiple tokens. BXTBs are governance tokens that can be mined or purchased and then staked, along with supported stablecoins such as USDT, to mint CHIPs and produce yBXTBs. Holders of the latter, meanwhile, earn returns by receiving a portion of the network and the transaction fees generated on the sidechain.
“Because BTXB uses a Proof of Capacity sidechain that delivers high throughput and low rates, BXTB can be mined on very small and inexpensive devices,” explains Hughes.
Proof of Capacity mining works by pre-composing the answers to cryptographic challenges and storing them on memory devices such as hard drives before the physical mining process begins. The responses are then checked, without the need for an intensive calculation process.
“Anyone with a hard drive and an internet connection can contribute to validation and consensus – this is completely different from Proof of Work (PoW) and Proof of Stake (PoS) blockchains,” says Hughes. “As a result, BTXB is accessible to the wider community, strengthening decentralization and increasing network integrity.”
As for the benefits of using CHIP rather than BXTB-backed stablecoins, Hughes is aiming for prohibitive transaction fees and long confirmation times.
“I have met many companies who have expressed the need for such a solution in their plans to use blockchain. The gaming industry appears to be the only vertical market with an immediate need for BXTB, and it is a natural choice in view of the growing need for transparent regulation.
“Companies can simply adopt CHIPs as an integrated solution on top of their existing technology stack – the BXTB infrastructure can handle the rest. By allowing game output to be verified on the blockchain, players can interact with operators reliably, something that has been needed for a long time. “
From the game to the Defi
While BXTB is primarily conceived as a business-ready stablecoin solution for the gambling industry, its defining characteristics cannot be denied. Indeed, many interested parties will be drawn to the platform solely to earn returns – online games will not enter their minds. This is something that Hughes readily recognizes, but sees BXTB as a serious update on the existing defi protocols.
“Today’s return systems do not generate value through sustainable means. Many defi-yielding projects are doing so at the risk of presenting a musical chair scenario, where early adopters receive the highest returns and late adopters put their underlying collateral and funds at risk.
“BXTB, on the other hand, makes money by offering utilities and solutions for existing real-world use cases, such as the gaming industry. In the simplest iteration, a small processing fee will be charged for every transaction that occurs with CHIP, which is paid as an incentive to yBXTB holders. This incentive mechanism, or “yield”, promotes the liquidity of CHIPs and makes it even more attractive for businesses. “
“The long-term intention is to move from being a foundation-managed blockchain to a fully on-chain governed protocol, similar to that of a DAO in other blockchains,” explains Hughes. “The BXTB tokens will be used in some way as governance tokens, as they are readily available through Proof of Capacity mining.
Whether BXTB will transform stablecoin, online gambling, or the defi landscape remains to be seen. What is clear is that defi is moving out of its vertical and starting to shape other industries, from games to payments.
Disclosure: no position.
