What is BounceBit: Retaining Liquidity in Bitcoin
The concept of liquid restocking, a topic that has gained significant popularity in recent quarters, offers users an exciting opportunity to gain additional value from staked tokens.
But predominantly this has been implemented in various Ethereum-based applications.
BounceBit, on the other hand, offers a BTC repurchase infrastructure designed to provide a base layer for various repurchase products.
In the guide below, we’ll take a closer look at how BounceBit works, the tokenomics behind the native cryptocurrency, and more. Let’s dive.
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What is Fluid Retention?
Before explaining what BounceBit does, it is important to understand the liquid repurchase concept we mentioned above.
You may be familiar with liquid staking protocols and their liquid staking tokens (LSTs). A mechanism that stands out with protocols such as Lido. Users can deposit their ETH into Lido (or other protocols) and receive a synthetic representation of that ETH. This is a new token that should be pegged to ETH 1:1. They can then use this synthetic ETH to perform various operations with other protocols that support it.
Liquidity buyback is a process that aims to increase the economic security of external systems. Essentially, you can buy and repurchase your synthetic ETH (LST) and receive another token called a liquid repurchase token.
As mentioned above, most LRT protocols are increasingly focusing on Ethereum due to its Proof of Stake architecture.
BounceBit, on the other hand, is building a BTC repurchase infrastructure designed to provide a layer for restocking products on the Bitcoin network.
How do they do it? Well, let’s find out.
What is BounceBit?
In order to reimagine the value of Bitcoin, BounceBit proposes an infrastructure designed based on the belief that Bitcoin should be predominantly asset-oriented at the infrastructure level.
BounceBit differentiates itself as a Proof of Stake layer, an ecosystem where validators must stake BTC and the native BounceBit token. This establishes a dual-token security system that aims to strengthen the network itself, while also increasing the intrinsic value of Bitcoin by providing holders with an active role in validating the BounceBit network.
The goal is to enable a symbiotic relationship between BounceBit’s native token and BTC to create a versatile and resilient network.
BounceBit also strengthens interoperability with other EVM-compatible networks, connecting staked assets such as BTCB on the “Build ‘N’ Build” (BNB) Chain and wrapped bitcoin (WBTC).
Now it is worth noting that there is a very unique challenge when it comes to generating yield on BTC, which is inherently different from the yield generation protocols associated with Ethereum. Bitcoin protocols cannot generate returns when BTC is held in multi-signature wallets. BounceBit faces the challenge by integrating a centralized finance (CeFi) approach, leveraging Mainnet Digital’s custody services and Ceffu’s MirrorX technology stack.
This essentially allows Bitcoin to maintain its presence on-chain and also participate in trading activities on centralized exchanges.
What Problems Does BounceBit Solve?
- Combating Lack of Transparency
BounceBit includes on-chain proof of reserve (PoR) while also maintaining transparent operations with the aim of restoring trust and providing a secure platform that allows BTC holders to earn interest.
Undoubtedly, BTC holders face the problem of underutilization of their assets. BounceBit aims to address this challenge by providing a means for people to actively engage their assets in the emerging sectors of decentralized finance and NFTs.
- Improving Bitcoin Utility by Enabling Additional Use Cases
- Consolidating BTC Across Chains
Understanding BounceBit’s Infrastructure
BounceBit is building a network that uses the well-known Proof-of-Stake (PoS) consensus algorithm to rethink traditional staking models focused on a single token. They call this approach Dual Token Proof of Stake (PoS).
In light of the above, it is worth explaining that the architecture of the protocol includes a set of node operators. These can be chosen as validators. These are the parties who have to stake BB (BounceBit’s native token) and/or BBTC (BTC staked on the BounceBit chain). Their job is to record and verify transactions on the network, and they receive transaction fees as a reward. Since it is a hybrid model, validators can choose to accept BBTC and/or BB tokens.
The purpose of accepting BTC, albeit staked on the consensus mechanism, is to launch the protocol with the deep liquidity that the Bitcoin network can offer, while also taking advantage of the relatively low volatility.
- Sustainable Validation Economy
BounceBit’s chain is fully compatible with both the Ethereum Virtual Machine and Solidity. The latter is the programming language used mainly to create smart contracts for Ethereum. This ensures a smooth transition for developers while also leveraging Ethereum’s proven security and abundant ecosystem.
- BounceClub: For Owners and Members
For BounceClub Owners -> If you meet the criteria to own a BounceClub, you will be able to choose the protocols you want from the BounceBit App Store and customize the space in a seamless and extremely user-friendly way. There’s a complete guide you can find here.
For BounceClub Members -> Assuming you are not interested in running a BounceClub, you can still browse various clubs created by other users and participate in different Web3 events. You only need to connect your wallet.
The main purpose of the BTC bridge in the BounceBit ecosystem is to provide a secure way to transfer BTC between the Bitcoin network and other EVM Chains, including BounceBit.
This is a critical component of the functionality and completion of BounceBit’s vision and purpose.
It is important to remember that network validators are responsible for securing the bridge. Each validator also runs a bridge node. They take the multi-signature approach a few steps further and contribute to the signing of cross-chain messages. You can find more information about the BounceBit BTC bridge here.
Liquid Staking Tokens
BounceBit has a native liquid staking smart contract. If users choose to stake their BB or BTC, they will receive an LST (liquid staking token). These:
- stBB – Derived from BB staking
- stBBTC – Derived from BBTC staking (BTC staked to BounceBit)
BounceBit Economics: Everything You Need to Know About BB Tokenomics
First of all, BounceBit’s economy consists of three types of actors, each of which is relatively self-explanatory:
- Users
- BB Holders
- Node operators
BB tokens can be used in multiple ways, so we will list a few of them:
- Use BB to participate in on-chain governance
- Stake BB to participate in the PoS Dual-token mechanism (read above)
- BB is paid as rewards to validators who ensure the security of the network
- The value of gas fees on the network
This is the BB token distribution:
Testnet and TVL Incentive: 4%
Investors: 21%
set: 10%
Advisor: 5%
Binance Megadrop: 8%
market making: 3%
BounceClub and Ecosystem Reserve: 14%
Staking Rewards and Delegation Program: 35%
binance Megadrop: Step by Step Guide
As you can see, Binance Megadrop has reserved 8% of the total supply for itself. It is a new token launch platform designed to integrate Binance’s Simple Earn and the company’s Web3 Wallet.
It aims to provide users with early access to certain Web3 projects long before they are listed on the exchange.
Below is a step-by-step guide on how to participate in Binance Megadrop for BounceBit.
There are two ways to participate, and both require a Binance account.
You can make a registration using this link and also get a $600 welcome bonus as an exclusive offer for CryptoPotato readers!
Now that your account is ready, the first thing you can do is go to the Megadrop section and lock your BNB to earn points. From here you can subscribe to your BNB and lock it for a certain period of time, thus earning points.
As you can see, the longer the subscription period, the higher the multiplier.
The next thing you can do is complete Web3 tasks. To do this, you will need Binance Web3 Wallet. You can create one from your Binance mobile app. Go to your “wallets” tab at the bottom and then tap “Web3” at the top.
just follow the instructions from here; Your Web3 wallet will be created. Now that your wallet is complete, go back to the Megadrop section and press the “Start Mission” button at the bottom; You will need to stake with BounceBit.
After that, you can follow the instructions that will guide you towards completing the task.
The total points you will receive will be a combination of your Locked BNB points, your Web3 mission multiplier, and also add your Web3 mission bonus. So the formula looks like this:
Total Points = (Locked BNB Points * Web3 Quest Multiplier) + Web3 Quest Bonus.
If you fail to complete all missions you will only receive 1 multiplier.
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