Original author: Satoshi Protocol

Original source: Shenchao TechFlow

Introduction: Entering 2024, the cryptocurrency industry has finally ushered in another bull market. The moment when BTC prices broke through historical highs is inspiring all DeFi pioneers and Bitcoin Maxi. The next round of BTC ecological expansion is now!

Since the launch of BTC in 2009, the concept of digital gold has been deeply rooted in the hearts of the people. It has gone through many halving cycles, accompanied by the rapid development of the global encryption market in the past few years. In the 15-year process of the implementation of the encryption industry, BTC is the source of all this. Its intention is to create a new decentralized currency system. However, as of now, BTC is still widely regarded as a digital currency. Gold assets and investment attributes have always been the most popular added value. However, as an ideal form of currency, BTC still has shortcomings in this regard. In the 15 years since its inception, it has not been able to demonstrate its superiority in peer-to-peer payment networks. This is obviously inconsistent with Satoshi Nakamoto's original vision.

With the BTC ecological inscription craze and the over-the-counter SEC's approval of BTC ETF and a series of accelerated catalysts, the BTC ecosystem has ushered in a new cycle of rapid capital inflow. The demand for Bitcoin ecological expansion has become increasingly urgent, and the construction of Layer 2 network has no need. Doubt it will be one of the popular tracks.

Regarding BTCFi, it has always been a hot topic in the encryption market. However, the scalability of the BTC network in this regard has long been restricted by network infrastructure limitations. How to truly leverage this huge potential market? The current encryption industry actually already has A clear solution is to create a stable and efficient stablecoin protocol based on the existing BTC Layer2 network as the cornerstone to meet relevant market needs.

Based on the above consensus, BEVM's first stablecoin protocol Satoshi Protocol has been officially launched in early March, and testnet-related activities have been launched. This article will lead readers to understand various aspects of the protocol and how to participate in testnet activities. I hope that after understanding Satoshi, I can have a general impression of the development trend of BTC Layer2.

Satoshi Protocol and BEVM - BTC ecological expansion and implementation protocol

BEVM: Bitcoin Layer2 compatible with EVM development experience

如果加密用户对 BTC Layer2 有所了解，那么一定会注意到 BEVM，这是一个完全去中心化的 L2 解决方案，引入了与以太坊虚拟机 (EVM) 兼容的机制，将 BTC 作为网络 gas，交易数据将存储在 BTC 主网上，验证交易的方式则改为了在 BTC 轻节点上。

The solution adopted by BEVM is different from Ethereum Rollups. The verification method of light nodes needs to be more point-to-point during the network sending process. BEVM directly uses the public chain network that supports WASM. This method is faster and more efficient than the previous EVM virtual machine. The BTC light nodes can directly obtain corresponding data from the BTC network.

The Layer 2 solution upgraded from Taproot to BEVM provides the technical basis for breaking through the limitations of the traditional BTC network. The focus is on breaking through the constraints of BTC multi-signature. The new signature algorithm realizes transaction aggregation, which greatly reduces the amount of transaction data and transaction costs. .

In addition, the combination of the MAST contract framework and the aggregate signature algorithm brings more flexibility and scalability, providing Layer 2 with a high degree of programmability and scalability.

And because BEVM is compatible with the Ethereum Virtual Machine (EVM), it supports development using mainstream wallet applications such as Solidity and Metamask. This compatibility brings a user experience similar to Ethereum. Several testnet projects have been deployed on the BEVM ecosystem page, including Satoshi Protocol.

CDP Collateralized Debt Position

Before introducing Satoshi Protocol, you need to understand the CDP (Collateralized Debt Position) protocol it adopts.

CDP 代表抵押债务头寸，经由 MakerDAO 首创后已经应用在在许多 DeFi、NFTFi 等不同类别的项目之中，Satoshi Protocol 同样采用了这个协议，允许用户存入 BTC 作为抵押品并借入稳定币 SAT，并配合 SAT 本身的机制玩法来实现代币的价格稳定，这种方式能够让用户在持有 BTC 的同时获得流动性。

Satoshi Protocol: Unlocking Bitocin Ecological Liquidity

Now that BTC has been widely recognized, its investment value is increasing day by day. Not only the crypto market, but also the traditional financial system has gradually included it into the open market. The earlier approval of the BTC spot ETF has proved this. However, BTC, as a creative blueprint for an ideal currency, has never been able to demonstrate its superiority in this regard. An ideal currency should have the properties of being a medium of exchange, a unit of account, and a means of storing value.

但 BTC 本身的价值与共识又使得它可以作为广泛认同的稳定币的价值支撑，所以基于 BTC 的稳定币协议是非常必要的，而 BTC Layer2 发展迄今，已经为这类协议提供了较为完备的技术基础与网络安全，所以 Satoshi Protocol 的诞生可以说是恰逢其时。

Based on the various characteristics of BEVM mentioned above, Satoshi Protocol, as the first CDP protocol in its ecosystem, aims to provide liquidity for BTC. The SAT USD stablecoin, which is entirely made of BTC as an excess reserve asset, will be able to unlock the diverse application scenarios of BTCFi.

The basic model of the SAT token is that users can deposit BTC into the protocol for over-collateralization and lend out the stablecoin SAT anchored at $1 for free use. This initiative is obviously aimed at the potential trillions of dollars of liquidity in the BTC ecosystem. If If it can be unlocked successfully, the market prospects are very huge. The stable currency SAT is just the cornerstone of the first step. It can provide users with a way to obtain liquidity while holding BTC.

SAT stablecoin operating mechanism

The operation of SAT is composed of over-collateralization, liquidation mechanism and arbitrage mechanism. This is also a common feature of most DeFi stablecoin protocols, but it is the first time in the BEVM ecosystem.

overcollateralized

Users must maintain a position mortgage ratio of more than 110% when opening a position to avoid liquidation. In other words, when a user lends 100 SAT, he must lock BTC with a total value higher than 110% of the loan amount as collateral, that is, 110 SAT worth of BTC.

Of course, the price of BTC will rise and fall according to market fluctuations. If the price of BTC falls, causing the value of collateral to decrease, the liquidation mechanism will be triggered if the user's loan mortgage rate is lower than 110%, and the protocol will use SP (Stability Pool) The SAT purchases the liquidated collateral at a discount to repay the borrower's debt.

SP（Stability Pool）

SP is the key mechanism for Satoshi Protocol to ensure the stability of the protocol and provide liquidity.

After users deposit SAT into the stable pool, corresponding liquidity will be provided. If the mortgage rate of any user position is lower than 110%, liquidation will be triggered. During liquidation, the debt will be sold at a discount to BTC to obtain SAT. The process is Stability Pool provides a source of funding to complete.

Users who provide SAT as liquidity in the stable pool can purchase the liquidated BTC collateral at a discount; the protocol will use the SAT exchanged for the liquidated collateral to repay debt, ensuring that the protocol is in an over-collateralized state at any time.

SAT exchange and redemption

When the price of SAT is less than $1 USD, arbitrageurs can purchase SAT in the market, and through the redemption mechanism of the Satoshi Protocol, users can use 1 SAT to redeem (Redeem) BTC assets equivalent to $1 USD at any time and sell them Arbitrage. This arbitrage strategy will work when the price of SAT is below $1 USD, and the increase in demand for SAT will push SAT back to the price of $1.

When the price of SAT is higher than $1.1, arbitrageurs can mortgage BTC on the Satoshi Protocol to lend out SAT, thereby selling in the market to gain profits, forming corresponding selling pressure and pushing SAT back below $1.1.

All users can mint SAT by depositing BTC as collateral and paying a fixed annual interest rate of 4.5%.

The above are the basic mechanism characteristics of the Satoshi Protocol. The prerequisite for realizing these functions is the technical support of the BTC Layer2 solution of the BEVM ecological network. As a US dollar stable currency based on BTC, SAT's various derivative DeFi and trading scenarios require the BTC network to provide effective expansion solutions.

Although various stablecoin protocols have been available in the crypto market for a long time, the market performance of USD stablecoins based on BTC has been unsatisfactory in the past few years. There are many reasons for this, including the limitations of the BTC network itself, the crypto market's response to BTC Positioning etc. But it is undeniable that the earliest intention of BTC was to form an idealized currency. Therefore, the Satoshi Protocol’s exploration of BTC’s characteristics in this aspect is an exploration of its vision, and is based on the recent achievements of the existing encryption industry. Perhaps It will truly open up the trillion-level market liquidity contained in BTC itself.

BEVM mainnet will be launched soon

At present, Satoshi Protocol has been confirmed to have received investment from the BEVM Foundation, and many top VCs in the industry will also participate. The official Tweet of the project has also been forwarded many times by BEVM's official tweet.

At present, Satoshi Protocol is expected to launch the BEVM mainnet in mid-March, and there is news of a possible airdrop. It is also one of the first projects to be confirmed to be launched on the BEVM ecological mainnet. It has attracted a lot of attention. Testnet activities and Galxe activities are taking place at the same time. in progress.

The activities currently being carried out by Satoshi Protocol are actually different activity paths in the same cycle, and the rewards available are different, but they can be regarded as a phased warm-up before the project goes online on the BEVM mainnet.

Participating in different activities can obtain relevant OAT and NFT rewards. At present, the relevant rights and interests are not clear, but there is a high probability that it will be related to SAT airdrop rights or various platform fee reductions. This is also a strategy commonly adopted by many DeFi projects in the past.

However, what makes Satoshi Protocol different from previous DeFi projects is that BTCFi is currently a popular track with clear future expectations but in the ascendant. The construction of its associated BTC Layer2 solution is also progressing steadily, and is the same as ETH Layer2, DePIN and other popular competitions in 2024. Tao is also an area worthy of attention. Moreover, the US dollar stablecoin based on BTC is an unexplored track in the industry. Satoshi Protocol provides a set of operating mechanisms that have been fully verified by the market. It is expected to usher in a large-scale explosion after the launch of the BEVM main network.

Testnet and Galxe activities

Testnet activities

Event participation page: https://app.satoshiprotocol.org/nft

Satoshi testnet is announced: https://medium.com/@satoshi-protocol

Event participation reward: Genesis Spark NFT

Event start and end time: 3.6 22:00-3.18 22:00 (UTC+8)

According to the official website, as long as you obtain the test qualification and complete the position creation, and then deposit SAT into the Stability Pool, each address can receive the Genesis Spark NFT qualification once, with no total upper limit.

Steps to participate in the event:

1. Join BEVM’s official Discord channel to gain access to test BTC;

2. Use the Metamask wallet and switch to the BEVM test network (Satoshi will guide the automatic switch);

3. Go to the Position page and click Create Position;

4. Deposit test BTC and lend SAT – please ensure the mortgage rate is higher than 110% and lend at least 18 SAT;

5. Select and click Approve to confirm the wallet signature;

6.Approve 成功後，再點擊 Create Position；

7. After successfully borrowing SAT, please go to the Stability Pool page;

8. Enter the corresponding SAT deposit amount, and then click Deposit to confirm;

9. Go to Campaign after completion;

10. After completing the above steps, you have completed the test network activity and obtained Mint NFT qualifications. Click Mint to obtain Genesis Spark NFT;

Genesis Spark is the first NFT officially launched by Satoshi Protocol. Its naming and image design both convey the existence characteristics of digital gold of BTC itself. Although it has experienced 15 years of development, BTC is limited by network restrictions, making the P2P payment network always Failed to land effectively. However, with the iteration of technology development and expansion plans, BTC point-to-point transaction payments have become possible, and as it approaches its fourth halving, the market transaction demand of BTC and the development of related ecology will usher in a major explosion. The BTC-based USD stablecoin promoted by Satoshi Protocol will also become one of the driving forces for the development of BTCFi. Therefore, buying the Genesis Spark NFT that can be obtained in the early stage may be an effective long-term investment.

Galxe Events

活动参与页面：https://galxe.com/YwrNUBkpFyTpkRJTcKmZcX

Event participation reward: 25,000 Satoshi Pioneer OAT

Event start and end time: 3.7 12:00-3.18 22:00 (UTC+8)

In addition to testnet activities, Satoshi Protocol has launched multiple participating activities on the Galxe platform from February to March. The most recent is Satoshi Pioneer. By completing multiple designated tasks, you can obtain a limited number of 25,000 Satoshis. Pioneer OAT and Galxe activities are related to testnet activities. Including past Galxe activities, a total of 4 phases of OAT have been launched. The task setting is more complicated, and the purpose is to filter out real active users.

Users participating in the event can use Metamask to log in and enter the Satoshi Pioneer OAT event page. Since this event is related to the testnet event, but also includes community social media tasks such as The Satoshi contract that has been deployed on the BEVM test network has completed the interaction, so there are relatively many more activity paths. The corresponding rewards are also different from the NFT that can be obtained from the test network activities, and you can get a limited amount of Satoshi Pioneer OAT.

At present, the Satoshi Pioneer OAT of the Satoshi Protocol project has not announced the subsequent specific rights and interests content, and remains relatively mysterious. However, Galxe OAT, as a relatively popular token reward, can be associated with many types of set rights, so it is also appropriate to obtain it in the early stage of the project. More cost-effective.

Summarize

Satoshi Protocol has been making a lot of moves in the market recently. As the first stablecoin protocol in the BEVM ecosystem, its ambition to unlock trillions of BTC liquidity is evident. At present, this project is also one of the key projects promoted by the BEVM ecosystem. BEVM, which has come up with an effective expansion plan for BTC Layer2, has been regarded by the encryption market as a relatively potential ecosystem. So a project based on effective technical support, while also being efficient and flexible Satoshi Protocol, a revolutionary stablecoin protocol, has a high probability of making waves in the subsequent market.

After all, the door to a more diverse and liquid market based on the BTC network has been opened, and now is the best time to enter.

Satoshi Protocol's test network and community social media activities are in progress and will last until March 18th. After completing various tasks, you can obtain NFT and OAT rewards. Early participation will enjoy more special and ongoing rights in the future.