May 17, 2024
MTX Finance is building the DeFi ecosystem for Bitcoin by combining the power of the EVM with Bitcoin’s liquidity. MTX aims to enable lending, borrowing, Liquid Staking, and Layer 2 utility for Bitcoin. By overcoming the limitations of Ethereum’s DeFi ecosystem (scalability and high gas fees), boosting Bitcoin decentralization, and leveraging Proof-of-work consensus mechanisms, MTX stands to be the core of Bitcoin DeFi.
Bitcoin has the potential to accumulate a staggering $225 billion in liquidity through DeFi — Pantera Capital
There is a large untapped market opportunity for BTC DeFi of ~$225 billion and there is a severe lack of a dominant Lido-like stBTC asset that passively captures native yield. MTX will be a secure bridge between Bitcoin and the EVM ecosystem, as well as offer a Liquid Staking Bitcoin token (stBTC) to users. This will not only provide native yield to BTC holders, but also allow for the large yield-hungry EVM user base to gain exposure to BTC easily by earning yield in a safe and low-risk manner.
MTX’s vision is to become the largest Rollup chain for Bitcoin DeFi and #1 Liquid Staking Layer for BTC via stBTC. MTX will be the first EVM L2 Rollup chain for both Bitcoin and Ethereum. MTX’s new chain with stBTC as its central currency. This will unleash BTC liquidity for the EVM ecosystem, enable applications and markets to be built for stBTC, and create more value accrual.
Historically, Bitcoin has suffered from limited programmability and scalability but is the most secure blockchain. Applications built on Bitcoin’s base layer include Omni Protocol and Ordinals but their functionality is limited. New models and technology such as BitVM and Sidechain models have risen in popularity recently to address the limitations of Bitcoin’s base layer but they have their trade-offs with expensive transaction fees, relying on its own tokens for its security model, economic pitfalls, etc.
A Bitcoin EVM L2 changes the landscape for the Bitcoin ecosystem by allowing EVM-based permissionless applications to be built and run while leveraging the security derived from Ethereum mainnet and the liquidity of Bitcoin. This structure allows application creators to focus on building programs for both Bitcoin and EVM liquidity on an L2 while using the battle-tested Ethereum Layer 1 for consensus and settlement.
There are 4 main pillars to help boost decentralization and exposure of BTC to a larger audience.
The key products for MTX will revolve around bringing BTC holders recurring value through Bitcoin DeFi and MTX’s EVM L2, while supporting the growth and decentralization of BTC and MTX.
stBTC tokens will be minted for each BTC or wBTC bridged by users to MTX L2. stBTC will earn native yield through several sources including PoS verification (liquid restaking), hash rate markets, cloud mining, delta neutral funding arb strategies, MTX transaction fees, and L2 rollup sequencer fees
stBTC can also be used across DeFi projects that build on MTX L2 and accept stBTC as collateral for DeFi applications to earn even more yield. Value to stBTC holders will increase with more users in MTX due to network effects and scale benefits
The MTX protocol and stBTC will accrue yield and revenue through several sources:
stBTC base yield will be scalable with no impermanent loss as the lower risk, lower yield strategy.
MTX will offer opt-in automated yield strategy vaults that are riskier with higher rewards to allow stBTC holders to deposit and earn additional yield. Vault yields are to be sourced across a variety of DeFi positions, including:
MTX will offer a secure BTC bridge from Bitcoin <> Ethereum L2 via multiple partners introducing substantial BTC liquidity to the EVM ecosystem. BTC bridged from the Bitcoin base layer using MTX will be locked and stBTC will be minted on MTX L2 that will earn native yield.
MTX will also offer battle-tested EVM bridges (e.g.) to allow users to bridge ERC-20 tokens to the MTX L2 including wBTC, ETH, and stablecoins. wBTC bridged from Ethereum mainnet or other EVM L2s will be locked and stBTC that earns native yield will be minted on MTX L2. Other ERC-20 tokens can be used across MTX DeFi to earn yield.
An MTX token will also be issued at a later stage to decentralize governance and incentivize protocol growth. MTX holders will propose and vote on key decisions including allocation of TVL to stBTC vaults, thus reflecting MTX holders’ risk tolerance
Revenue from stBTC performance fees and MTX L2 sequencer fees will fund protocol operations, treasury building, growth, and potential token holder rewards. In the long term revenue may be returned to MTX holders via dividends or token buybacks, making MTX deflationary
MTX aims to be the EVM Layer 2 home for Bitcoin and utilize the Liquid Restaking Token, stBTC as a scalable yield-bearing Bitcoin asset to capture yield in blockspace production. Through MTX’s ecosystem, we aim to create a platform for the expansion of DeFi built around Bitcoin and the BRC-20 ecosystem where stakers can earn yield with our liquid staking protocol. Stay tuned for more updates about MTX.
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