The decentralized non-fungible tokens (NFTs) lending and borrowing protocol – BendDAO – is all set to embrace the Bitcoin ecosystem. In a Discord post, BendDAO said it will provide Bitcoin NFT loans and support the wBTC liquidity pool as a loanable asset.
The platform is also actively exploring ways to facilitate smooth interactions between BTC NFTs and its platform, considering options such as third-party cross-chain bridges and cross-chain bridges that leverage multi-signature wallets.
BendDAO will embrace the Bitcoin ecosystem
The official announcement from Hill, who is listed as a core contributor in the BendDAO Discord, read:
“It is time to embrace the BTC ecosystem by proposing solutions that enable seamless interaction between BTC NFTs and BendDAO, and support wBTC liquidity pools as loanable assets.”
The Third-Party Bridge Protocol proposal involves using an existing third-party bridge protocol to connect Bitcoin NFTs from the Bitcoin network to BendDAO on the Ethereum network. In this solution, users supply Bitcoin NFTs to the third-party bridge, which creates a 1:1 dedicated ERC721 token for the user. Users then deposit these ERC721 tokens into BendDAO to borrow ETH, USDT or wBTC.
Such a system will have a proven infrastructure with established security protocols and rapid integration with the ability to deploy immediately.
Multi-Signature Wallet Bridge is yet another solution that BendDAO is exploring, which uses a multi-signature wallet system that acts as an intermediary between the Bitcoin and Ethereum networks. In this case, BendDAO retains more control over the bridging process. Another benefit is improved security through multi-signature authentication.
The fear of a bank run
Last year, BendDAO was caught in a financial crisis along with several other projects after borrowing an amount of approximately 15,000 ETH.
In response to this challenge, the team behind the project formulated a proposal aimed at restoring confidence among ETH depositors. This proposal included short-term adjustments to several parameters such as the liquidation threshold and the auction period, along with changes to the Internet base rate and improvements to the user interface.
Despite the setback, BendDAO unveiled its strategic plan last month. The roadmap outlined the completion of development and extensive upgrades for the V2 product prototype in the fourth quarter of 2023, the launch of a beta version in the first quarter of 2024 to gather user feedback, and the introduction of the official V2 version in the second quarter of 2024, with new functionalities and an improved user experience.
Additionally, in Q3 2024, BendDAO plans to update V2 tokenomics and implement on-chain governance to encourage greater community involvement in decision-making processes.